Win streak. If youre bullish on the economy, think were going to have a soft landing, small caps, nice boost today. Oil stabilizing. That is the big story today. Pick yours, josh brown. I think yields and i think the steepening in the bond market. I think you nailed it, judge. Yields down for every duration and in the belly of the curve is where you find them the most, the five year, the seven year both down 14 basis points to 4. 6 and 4. 65 respectively. Think about all the steepening weve seen in that inverted yield curve. The ten year, twoyear spread is now 30 basis points. Its the steepest weve seen the curve since october of 2022. One year ago. We have done a lot of work in the bond market. The tenyear three month is right now negative 85 basis points. That was almost negative 2 june of 2023. We have made a lot of progress and then you think about the stock side of the equation, you have an s p 500 trading at an 18 forward p e, small cap is 12. Southwest growth is still 20 forward p e. If people are talking about the market is undervalued, thats what theyre talking about. S p value is a 16 forward p e with a steepening yield curve. I think were in a good situation between now and year end. I like where valuations stand. Back to jimmy goldie looks. The market is reacting as if that may be the case or is trying to buy into that story. Whether it holds or not is anybodys guess, and earnings will be a good tell on that, the movement in yields. The nasdaq 100 above the 50 day for the First Time Since september 15. Nasdaq up 4. 5 in a week. You can pick your spots of what would be perceived to be more bullish signals. So when last we talked, scott, goldilocks job report was very good, for me, fundamental reason why it should rally and it did. I think the market has rallied because of yields coming down but i dont like why yields have come down. Its this exogenous issue. Its not the reason the market should be rallying. Hang on, josh. Let me cook, to use your term. Where you get more fundamental backing for the rally, in my opinion, is thursday. If you get a cpi that comes in softer than expectations. Headline expected 3. 6 , you come in below that, this market is, i think, going to put to bed the idea of the fed raising rates anymore. If the market grasps that the fed is done, this economy is strong, look at the labor market. Look at ism manufacturing bottoming, clearly coming out of the recession its been in. That would be backed up by earnings. For me thursdays cpi is what im looking for. Josh, you were saying, i disagree. I heard you. Why . Both lorie logan and jefferson, two fed speakers in the last couple of days have mentioned the fact the work i referenced done the long end of the curve might allow for the fed to calm down. Market conditions are doing the work for them. That could be the end of rate hikes. I disagree with what jimmy said about the geopolitical reasons being the sole reasons weve seen the bond market he didnt say it was the sole reason, but it might be a reason. Josh, your point is well taken. Ma mary daly alluded to the same thing. Every fed speaker is suggesting the bond market has done a lot of our work for us. Maybe we can do nothing from here. The nasdaq, just dial in on that because its taking a cue from the rate. The 100 is above the 50 day in near a month. When we talk about the nasdaq, its represented by the biggest names. So the nasdaq is alphabet, amazon these names are all having a move. They slowed down for a while and then it appeared more participation and now theyve come roaring back in part because of their defensive qualities and not just offensive qualities. This time of market where we dont have a push to higher rates where inflation is coming down,a soft landing and maybe moving into a more sustained growth period they are just themselves. They have a great Balance Sheet. Relative to some other more cyclical sensitive areas. Likely to outperform, wolfe has been more negative than most. Bearish. Likely to outperform from now to year end as they are initially viewed as defensive into higher for longer Interest Rates. You get both offense and defense. Many names of the nasdaq are smaller cap. And they are showing a little bit of life and have been left behind all year. Sarat, what stands out to you the most . We have a new degree of geopolitical risk. The rate story remains probably the most important but the signs from the overall more bullish picture. What stands out . The idea jimmy was talking about, if you take the uncertainty out of are we going to raise rates . You can have companies, investors, say i know what im facing. Im going to start dipping back in. You have, hey, you have a sloping curve thats positive in our favor, more capital will come out of treasuries, out of fixed income. If we get some type of numbers, inflation is softening, you could be off to the races because youve had so much of a pullback. The knock on some of the growths from some of the people who dont like them here is valuation. Theyre too rich. Alphabet hitting a new twoweek high, you could make the case because i hear it all the time they are growth at a reasonable price. We can use the term now. Alphabet hits a new one in its own right. Everybody on the desk owns it. Everybody when they do talk about it says, well, relative to some of the others in the group its cheap. Its chief and is an excellent executor. They dont have huge problems hanging over their head. Theres an antitrust thing. There are some concerns about next year that, number one, the way that people search might change because of ai. I would argue its an opportunity for google as much as for anyone else. There are concerns about acquisition costs of traffic. They have the deal with apple to send from ios. There are some potential things hanging out there. The story, to me, alphabet seems to be the one, microsoft two, amongst the magnificent seven they dont seem to have any potential hiccups in front of them. There arent any substantial negatives there. And in the absence of that, people will gravitate toward these stocks especially if there are active managers and the severely trail the market, those people are not reaching for nvidia. It looks ridiculous. Alphabet is the name they can buy and i think feel better about the fact that theyre in the game. January 23rd, okay feels like forever ago microsoft announces the deal, jim, with chat gpt and open ai. Google is only up 41 since then. A day it was not one of the magnificent seven because the perception they dropped the ball. Not me. No, i know. Nor bill ackman. You remember what he told me at delivering alpha. Why its such a large position and why he bought more. Chat gpt was launched, incredible, gamechanging product and google fumbled their offering. People said google is way behind on ai and the stock sold off to 15 times earnings. For one of the greatest businesses in the wrld, and we did a fair bit of work, they took a more cautious approach and made people think they were behind and open ai would eat their lunch, it led to a mispriced stock. We bought more in the 120s. Kari, its your biggest position and is at 140. A new high. We think its attractive. Yes, okay, thats a little higher than the market but considering the growth and, remember, when you type in a question and search now, google answers the question because its, first of all, remembers the word you want to type and finishes the question. You can type is what is scott wapners birthday it will give you. Youll get the birthday, right . It gives you questions and answers. I think the amount of intelligence they have put into the Search Engine is phenomenal. Sarat . To your point, the danger josh has identified is built into the price. It should trade at 30 times but trades lower multiple because of potential Government Intervention and cyclical exposure. Googles revenue is based on advertising. I think the stock is reflecting that but in such great businesses where their Balance Sheet is so strong. Theyre sitting on so much cash thats the other thing. Thats the important thing. I heard you say 20 times, maybe thats expensive. There is a Reason Companies with more cash and less dead should be shared. 20 times, frankly, is a very attractive multiple for this stock. January 23 or 26th, it was february 8th, i think it was, their bard program gave the wrong answer to an astronomy questioned and the stock crumbled. Google is done. Its ridiculous. They got it together. Its still attractively priced. This is the one tech stock im overweight. Even if it is true that they ceded a leadership opportunity to a microsoft, that doesnt mean theres no opportunity of course not. For an alphabet. I dont think thats what happened. There will be many winners. Josh . Large language models are a commodity. Meta made llama 2 available to everyone for free. That war is over and there are three or four lmns that will matter. I dont mean they dont have value. They have a ton of value. Where will it be made . In the application layer. If meta makes llama 2 available, you run is at aws or azure or in the google cloud. That initially this spring had been survived is in the gpt itself is incorrect, dont understand about the time line of development here and where the money will be made. I think that was a huge overreaction. If you have concerns about bard getting an answer wrong, spend like an hour with chat gpt. It makes things up. This is brandnew technology, and none of it is immune to making errors. A couple things i want to note. We saw a call today that really got our attention in the mega cap universe, though not a mega cap stock. Corvo and sky works downgraded to sell at citi. Thats interesting because theyre always mentioned as part of the ecosystem. Qorvo gets revenue in fiscal 23. What is sitis apple analysts have on the stock if the citi Analysts Covering semiconductors down grades those two stocks within the universe of apple to a sell . The analyst has a buy rating with 2040 as the price target. Thats kind of interesting. The call around qorvo and sky works is on the possibility of the new phone from huawei in china. So, to me, it all trickles down to apple. Kari, how do you want to think about this . I thought it was a peculiar call. When i saw that, i thought to myself, the analyst must think apple is putting pressure on suppliers on price. I was thinking the gross margin would be pressed. So thats what i thought. It did seem very odd. Apples position, i dont feel, is particularly challenged by huaweis new phone. What were seeing is a modest new introduction and is still the dominant name. I think thats a positive. Smart phones have been weak. Yes, in general. Correct. The real question what is the upgrade cycle going to look like for apple . Youre right, kari, but thats the Bigger Picture where are we in this longawait ed upgrade cycle . Now you do it . Because the substitution risk. These are not scott, i think you have it right to point out. Its the substitution risk in any phone, rf chips. This is commoditized. Look at the stocks going down for almost 18 months in a straight line. And apple is using their own product. Apple will say you think they have a threeyear deal . Were doing our own chip. Was it wednesday the call to the bottom . Apple is up every day since that downgrade up every single day and earlier it was down a smidge and its up 4 in a week. Nvidia is up 6 . Alphabet up 5. 5 . Meta is up 7. 5 . Tesla up near 8 . Not surprising nor risk on nasdaq environment. Interest rates, right . Tesla will be a participants. Thursday is a year from october of 22. Paul tudor jones, recession likely. Stock market will decline about 12 . I listen to him when hes on because he makes great points every time hes on. What about this idea, though . Recession likely. Stocks may decline 12 . If you look at the market weighted, maybe that happens. We were talking about the small caps and mid caps. If you get multiple compression and advertising slows down and multiple compression on the big stocks, you still have other places to play. Thats why being in the index will be tough. You can play around the edges and do well. For most of this year hes been negative. Astute enough investor if he sees Something Different hell call it differently. A lot of people i understand, but the recession call is one many people have made, and it hasnt happened and the likelihood seemed higher the last couple of months and now is coming back down perhaps again if we dont get another rate hike. Are we getting the recession because the fed went too strong or because we have a demand issue . If its the first you could be down 12 . I dont think it is. Youre two days away from the oneyear anniversary, jim, of the october bottom in an environment not everybody is on the same page suggesting were good. There are a number of people who think that was a bottom, maybe not the bottom. A lot of voices on that. Yeah. So im glad there is a wide array of thoughts. I worry when everybody is on the same page which, by the way, at the beginning of the year remember how many people had models saying 100 recession . Thats ridiculous. Anyone who says theyre 100 certain, throw them out. If a year ago any of us said were in a recession, were not going to be in recession i will pat you, too. Dont hurt yourself. People were punching me in the face. It didnt happen. The market should be up. Ill pick a statistic that matters to me. This economy is not close to recession. As for the risk, we can look at resumption of student loan payments, there are always risks, folks. The market is cheaper than it was. We have the pablt of a nice, soft landing and keep growing our economy. We still have a new move from sarat that were going to get to. Which is a play on the economy, i think, for sure. Well do that when we come back, our calls of the day. One firm callinghiau sck ts toto best in class. What do you see on the horizon . Uncertainty . Or opportunity. Whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined Risk Management are needed most. Drawing on deep expertise across the worlds public and private markets in pursuit of longterm returns. Pgim. Our investments shape tomorrow today. I told you about a new move that our guy, sarat has. You bought fcx, free freeportmcmoran. Balance sheet looks better. Going into a commodity, talk about cash flow is important. Secondly the demand for copper will be increased over time and why do we think that . Its built into infrastructure and utilities. The demand for evs, all the things that will be increasing down the road, thats copper and the supply side, it takes eight years to get a copper mine up. And at this price where we are, if Interest Rates there stay higher for longer, i want to be in commodities, in energy, in places that will partake in an economic that will do well. You use the words over time. Is that suggesting this is a longterm hold for you . I dont know your typical time frame of holding. A threeyear hold. If rates go back to 3 , youre not going to do well with a freeport well, thats an interesting perspective. The rates go to 2 to get the economy back restarted, youll be hurting the stock because demand will be cut off. What if inflation goes down but the economy stays strong . That could happen and the stock will do well but if rates stay up higher, they have Pricing Power in copper. What about china and demand for copper given the squirreliness of their economy right now . If that is a pleasant upside built into the stock, were not saying it will do anything this is more demand outside as we become more on shoring world. A company like free port can then supply to different countries. Jimmy princeton, is squirreliness a word . I took vocabulary 101. Its a word. Ill take it. All right. What about fcx . Free port . I think wait a second, shes a growth manager. I dont think shes lived at freeport. If sarat thinks its turning, im with him. Josh, any interest in freeport . No. Excellent. Steve kovach thats the shortest answer ever. What do you think about freeport . How about the headlines . Thank you, scott, here is your cnbc news update. The gaza strip is calling for international aid. The United Arab Emirates president pledged 20 million for the region. The support will be directed through the United Nations relief and works agency for Palestinian Refugees in the middle east. Egypts foreign minister said the country is working to deliver humanitarian aid to gaza. House speaker Patrick Mchenry opened the floor today after Kevin Mccarthy was ousted last week. Mchenry told reporters the goal is to elect a new speaker by the end of the week. So far two gop leaders have formally entered the race. Steve scalise and jim jordan. Lawmakers will return this evening to hear from both candidates. And finally Allen Weisselberg for the Trump Organization took the stand today in Donald Trumps new york fraud trial. Weisselberg has said he was aware the Square Footage of trumps tower apartment was listed incorrectly when determining the value on financial statements. He claims that he was focusing on other things because the apartment size was only a fraction of trumps wealth. Trump is not in court today to watch weisselberg testify. Scott, back over to you. Steve kovach, thank you very much. A big buy call in the car space plus more reaction to pepsis better than expected quarter. All that and more when we return. This thing, its making me get an ice bath again. What do you mean . These straps are mindblowing they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. And you are . Im an investor. In invesco qqq, a fund that gives me access to. Nasdaq 100 innovations like. Wearable training optimization tech. Uh, how long are you. Im done. Im okay. Icy hot. Ice works fast. Heat makes it last. Feel the power of contrast therapy. So you can rise from pain. Icy hot. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Were back. Lets get to our calls of the day now. Some tickers youre ready for, okay. Are you good . Orly, what is that . Oreilly. Initiated outperform, price target 1,100. They say its best in class. Yeah, its definitely best in class. This has been an interesting stock, outperformed the last 12 months. The stock has underperformed this year. And it had such a strong move because people