First we start off with a battle for the ages netflix soaring to an all time high after an Earnings Report. Facebook and amazon trading at an all time high very different story for bank stocks Goldman Sachs and bank of america following the foot steps of their peers and dropping. The question is do you buy this dip in the bank stocks or stick with the winners which is tech stocks i think you have to where your looking yeartodate or one year performance . That tells a bigger story that were looking at right now if you look at tech, obviously the runaway leader if you look at financials versus tech on a year ago basis financials are up 32 . I dont think anybody knows they beat tech on a year ago basis because of the pop coming out of the election so its not as if they really lagged fms, that is. So i do believe you buy tech now. As the underperformer to the financials because netflix reported up 10 . Its a tough trade. What steve is talking about yearonyear basis its up we have a lot of the tech stocks that make a disproportionate most indices are up so much. Facebook making so highs google is up 25 they are really accounting for a large part of the performance in the major u. S. Indices we look at the bank stocks i think you dont buy them here because they underperform since the market actually topped out or since these indices topped out or sectors topped out. Carter talks about it all the time, underperformance in 2017 of the bank stocks is glaring. A lot of people buy them and they are cheap yet no reason to go in and buy them at this point its hard to decipher these quarters and say you have to buy them well i disagree to me i look at what happened to Technology Today it seems ridiculous that netflix puts up 5. 2 million subscribers and facebook and amazon and google trade really well that doesnt really the fundamentals of those businesses are different. They havent changed at all. Money flows into the sector. I im long facebook and google thats great but for the banks which is more of the issue today, to me we saw the bank of america report i thought it was fine. They were a little ahead of themselves going in. I think that a lot of the reason that it rallied is still relevant still valid. We want to see rates move higher maybe that will take longer. Thats okay. I dont think weve seen a lot of the buy back yet. And i really do believe that a rerating of bank shares is why i disagree with everything you just said. Let me finish every single bit. Let me finish what happened to the bank stocks for years they have been in the penalty box. Its not fantastic but its there. They are healthier than they have ever been you have an administration that wont put more regulatory burdens on them. They are now able to use their capital for good, which is buying back stock and dividends. And i think they are out of the penalty box. This 50 discount or 40 discount multiple thats clearly not out of the penalty box. There wasnt a sector that i. T. Was more excited about youre not getting tax reform or Health Care Reform the market is trading at a multiple and the banks are trading at an enormous discount. You have to believe some things will change, make it more attractive when you see the round trip in the there are, in rates, in commodities, these are things then you look at this hard versus soft data these are things the bank sector needs happen to. That interest margin situation is a big one we see the 210 collapsing again here its a red herring. 210 is not that interest margins in general we expect it to be a bigger addition to bank of americas earnings and it wasnt it was disappointing the margin was expenses coming down. They hit that 60 number when you look whats going on here those five stocks you mentioned are trading independent to anything going on in economy they are secular stories thats why they are trading at all time highs or will be. The question for boston these sectors what is priced in at this point what is not priced in and what is priced in for the banks maybe not enough good news. The 90 billion in buy backs that will happen at some point is not priced in the tech story maybe everything is priced in i dont know obviously this comes on the heels of Goldman Sachs earnings relax. Dan was spot on yesterday. Hes been pretty spot on the banks. But ill say this the goldman quarter, you look at the goldman quarter very good. When they reported, the knee jerk in the stock was to trade higher briefly but hire. Why did it sell off . Because fixed income currency commodities put up a billion dollar number. The worst in the history of the company. Everybody took that as oh, my god goldman is collapsing. The reality is the currency in the commodities business which globally used to be 25 billion or so businessish for everybody for the whole pie is now a 5 billion business goldman the 21 or 22 of the overall business thats still pretty good the rest of the quarter by the way was outstanding. It comes to me and somewhat to karens point, goldman is 177 whats the right multiple . Its not one i think its closer to 1. 8 which gets you close to 300 name jpmorgan, you can make an argument that maybe jpmorgan is priced correctly but i still think Goldman Sachs is cheap the problem with goldman as you very well know trade cigarette 40 of their revenue on the call they wanted more disclosure they didnt get it thats not going away. Goldman is down 6 or 7 yeartodate bank of america and citi outperformed what used to be jpmorgan thats a rotation. When you look at it as a whole tech is not priced in. Nothing is priced in there thats where your growth is. When you say you think its odd, there was a reallocation of funds. Energy was down. Thats your real underperformer. You have to roll the dice on energy when you look at banks versus tech, tech is your real growth the backdrop too is people are looking at Interest Rates are back, the ten year is back at june 30th lows. If youre searching for that growth, go to areas of the market that have been the leaders and banks are in there but not as strongly as technology right thats playbook in this sort of low rates, stagnant growth kind of market environment for me, okay, its not the whole playbook i feel no need to be all tech or all bank or anything like that are you more tech than bank . Well, probably about the same but both very big. My single biggest position is google and facebook is a position jpmorgan, citi and bank of america are big as well. They have different risk rewards also i think more upside and more down side. If we get a Technology Route which we saw not long ago, we saw a few of them. Thats going be more painful Mohamed Elerian is joining Us Technology or banks . Technology. Its a fascinating discussion. Could you have had this same discussion if you were talking about the dollar, u. S. Treasuries versus german bunds in the last three months theres been three distinctive rallies one is policy. The trump trade. That favors banks. Two, is global reflation third one is liquidity and that favors tech. So right now were in a situation where liquidity is in play but the policy trade and inflation trade is not thats why its a better environment for tech than for banks, better for euro than the dollar and better environment for the bund than u. S. Treasuries we dont necessarily know what will happen to the policy side of it or even perhaps the inflation side of it we have a pretty good idea what will happen to the liquidity side of that and that it will tighten, it will be pulled back. A few weeks ago we had four or five Central Banks in the world being very hawkish your concerned that its just going to take a whisper from an ecb official or friends our own Federal Reserve and that liquidity will be perceived to be at risk we think more than a whisper and the reason why its because this market has been conditioned to buyingon dips so you need more than a whisper. You need a very strong statement. Ecb critical and well get some information this week. The fed, i think the market is right in saying that the probability of a september hike is low and the probability of a september hike is not more than 50 . However, however, be careful because if the fed starts worrying about Financial Stability that probability will change really quickly. Im sure you know the phrase that liquidity is a psychological term not a financial term when youre talking about liquidity, your talking about in the equity markets or talking about the debt markets around the world or all of them what your talking about . We have three very powerful sources of liquidity right now we have two central bank, the ecb and bank of japan that are pumping a lot through their security purchase program. We have corporations with very high Profit Sharing of gdp that are generating record profits and putting some of that back into the market. And remember what Income Distribution does to households. It puts more money, more income in to the hands of those that invest more in the market. These are three powerful source of liquidity but, liquidity is part of a journey. Its not the destination can it be a very long journey and enjoyable journey but fundamentals is what matters for the destination. We get a budget passed in a timely fashion which would arguably pave the way for some sort of tax cut then would you be more positive on the banks . I would because that would have two effects. One is it would change the psychology about policy is back, the trump trade is back and, two, it would make the fed feel a little bit less uncomfortable about rates. So you would see also the curve react. So, yes, i would if we see signals out of washington they can move on tax reform i would be more positive on the banks great to see you. Thank you. Make sense . Yeah. It makes a lot of sense. That in turn what makes markets. Im more in karens camp youre asking us to choose but to karens point i dont necessarily you have to chioose what did we do today . So i actually have been Holding Monsanto i dont like News Headlines about lawsuits are actually out weighing the deal news i sold 85 of my position and then i rolled more into avis budget thats a name that well talk about at some other time not as sexy as the other name. Im just looking for more opportunities. Get my Home Builders rolled out of a long term position. I feel you have to trim something. Karen i didnt do a lot today bank of america i owned. I didnt change my position at all. Im not selling any of the tech stocks thats rallying im hanging on to what i got two trades i got. I think youll see a retest of 23 by the end of september i think xrt, sell it on rallies. We have days like we had yesterday where you see these short squeezes in Department Stores and i think generally will be shortlived until we get more m and a or strategic transactions that indicate they may be out of the woods. Xrt is short we talked about netflix up 21 bucks today driving up these other much larger names. At the end of the day today you need to see some sort of sell off like we saw in june to take some of the fear or put a little fear in the market the complacency there and willingness to buy these stocks is a little nerve racking when you have a vix at 10 a couple of deals in there. Not deals, stories vertex, ibb. Coming up, United Airlines getting hit on its Earnings Report it battled whats an endless list of nightmares the ceo of Discovery Communications saying media must disrupt or die the traders tell us what they think will be the biggest disrupters and well explain how you can cash in on thimos ve of the dollar much more ahead. baby crying slow jazz music fly me to the moon and let me play drupt viewpoint drup news flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. The power of the nasdaq market. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Fore investing,ur clients consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Yeah, and i can watch theetion. Bgame with directv now. . Oh, sorry, most broadcast and sports channels arent included. And you can only stream on two devices at once. This is fun, were having fun. Yeah, we are. No, youre not jimmy. Dont let directv now limit your entertainment. Xfinity gives you more to stream to more screens. Welcome back United Airlines sinking despite an earnings beat phil lebeau has all the details. Why is the stock moving lower . You look at a couple of things some people will focus on the passenger revenue for available seat mile. Guidance is between negative 1 and positive 1 . Many people believe once they swing to positive for the Second Quarter we would start to see things grow from there the Third Quarter and Fourth Quarter are different than the Second Quarter lets look at those q2 numbers margin of 13. 2 , most analysts were expecting it to be in that range. That might be slightly above what people were expecting passenger revenue is expected to be around 2 , coming in at 2. 1 . Pacific revenue down 5. 5 . There are some challenges in china both in terms of the newer markets that united is going to as well as the competition from the chinese network, those carriers in china, the established carriers, chinese carriers as they continue to broaden their Network Reach come over to the United States a little bit more. As you take a look at shares of uniteed a couple of other things to keep in mind with regard to where the company is headed for its fleet going into this year and 2018 and 2019. They are delaying four airbuses. Deferring those deliveries while the Company Negotiates the full order that is initially placed with airbus on those dont forget well be talking with oscar munoz, ceo of you nighted airlines tomorrow morning on squawk box. Well talk to him about numbers for the Second Quarter but with the companys outlook for the Third Quarter, and some of the changes that have been made following what was a very, very rocky start. April was a disaster how important is china to you nighted. That competition is not going to abate any time soon i would imagine. The incident with the doctor, there was that chatter on chinese social media really condemning United Airlines alleging they did this because he was chinese little hard to know how much might be a spill over. Theres greater competition coming from china and that is the lucrative market where everybody wants to go. It helps that united was one of the First Airlines to be over there and has an extremely Strong Network to asiapacific and to china but as it establishes some of these newer destinations inner china theres a little bit of lumpiness. Well talk with oscar munoz about that i wouldnt say what happened with the doctor and social media in china theres a direct correlation. Some may draw that conclusion but i think its hard to say we have anything dede definitive growth is bigger thats my projection at this point, but having said that increasingly when i go over to china, karen, im increasingly hearing more chatter about the strength of the Chinese Airlines and when i talk with folks in the airline industry, they are talking about the growth and the aggressiveness of those Chinese Airlines as they are trying to establish more routes not only within asia but also asiapacific over to north america. Phil, thank you we look forward to that interview with oscar munoz tomorrow on squawk box so tough to trade the airlines because when you look, you think lower oil should be good for their bottom line but then you have more capacity so that hurts. If you look at the out performer used to be Spirit Airlines down 10 . Luv is up 23 . Stick with delta, had a more smoother path up 9 . Ual gave up a third of its profit for the stock right there. After hours print. Up 8 coming in, loses 3 after hours. A little too volatile. The session lows on ual and we should note all the other airlines, Major Airlines are trading lower in the after hours on the back of this. They will be aggressive on price and then start to hit margins for all of them. Im long deltax long united, long american. I want to hear the call tomorrow one thing that doesnt factor into my thinking the issue they had in april i dont think that matters at all. Seems very rear view mirror Second Quarter i thought was fine guidance was not great not awful either how do you trade the stock valuations are not concerned all airlines trade sub10 i think that deserves a higher multiple how do you trade it . 2015 old all time high was about 73 bucks good chance it trades there, holds. I would buy it off that bounce one thing we said and but for that one quarter five or six months ago priceline made an all time high again. But i thought it was a joke what is the butt for what . Sitting so bad. Im going to move on still ahead ibm falling in the after hour session as the Conference Call under way as we speak. Well get the latest numbers and headlines right after the break. Youre watching fast money on cnbc you are loved welco