Europe right now. The bull market is not done. Theres no reason to believe it should be done at this point. Pete . I tend to agree with jon. But i think its getting fatigued. I think theres a little bit of tire. If it was a mile and youve run three lapse, were on that fourth lap and its hard to get that momentum back weve seen in the past. Some may be listening to this conversation and saying, look, guys, why are we talking about whether the bull markets dead, it was over already. Sectors biotech down 40 from the high. Energy, 36. Transports down 30. Financials, 23. Materials, 27. Hasnt the market been in a bear market . Well, we certainly pushed down pretty far. I think the reason people havent accepted weve been in a little bit of a bear market is the fact that this snapback has been so sudden. Its like that bear market lasted all of about two seconds. Look at the differences weve seen, judge, from that oil price of 26 to 37, volatility intersections across the board, from oil to s p, from extremes dropping back down. There has been a dramatic shift. The exports is a great example that has been in a bear market. The people against this bull market will say, you dont see any rev knew growth, you dont see margins going any higher. When you look at these sectors, not just transports about industrials in general or tech or retail, to leaheyve been be down so much, you can see it going higher. You have to be sectorspecific going forward. You have a great segue to a webcast yesterday which said this about the market. I notice theres a lot of belief right now in risk markets. I think that risk markets now have a very poor risk reward setup. If we use the stock market as a proxy, it seems to me that the s p 500 maybe has 2 of upside, and probably 20 of downside for a 10 to 1 risk reward ratio. Okay. More clarity on that, he was telling me a few moments ago, jim lebenthal, Profit Margins are declining, eps is not rising, junk bonds remain depressed and will not rally further unless oil breaks to the upside, which seems unlikely. The fed has been tightening for two or three years. Sounds like elevated risk to me. Why not you . Claria couple of points here. Dont look at the market as a whole. Look at sectors. You can certainly find sectors were revenues and earnings per share will decline. High yield has been a concern. But for the last three weeks, youve actually seen inflows into high yield bond funds. Thats a good sign. It doesnt mean theyre right. The way i look at it you just tossed that off. You cant look at markets anymore, the top line. I think those are driven by machines. And in fact markets have been in a bear market because the average stock is down more than 20 . Look at the sectors i just ripped through. I almost went through the entire market. Right. I think theres opportunities. I agree with jeff on the market. Its fully valid relative to where Earnings Growth will be. It doesnt mean were going to go down 20 . Its just a question of where youre going to be selective. If youre buying markets, youre probably okay here to some extent, because the downside, i believe, is limited, because again, the machines and the algos. If youre buying stocks, there are great opportunities there. Grundlach also pointed out, oil is the key to everything. Its what weve talked about every day. Look at the moves weve had. The pushdown pulled everything down, the financials, all the transports, as oil plummeted. And as weve had this rally, were starting to see the boats float to the top. Lets not get ahead of ourselves. But judge, as we saw that rebound, take a look at russia. Russia is up 9 , i believe, the rsx year to date. Take a look at brazil, 23 year to date. Those big recoveries are because of what energy has done so far. The former leader down there. Lula. Thank you. That is one of the reasons brazil made that move. You can look at australia, canada. Any of the commodity economies right now that were in so much trouble, look at them versus the s p 500. And that tells you the difference between our market, flat, and those markets, running. Theyll be sorely disappointed. People hanging their hats are returning to a bull market. Im not going to disagree with you. Whats happening now is people looking to the second half of the year. Everybody, no matter how bearish they are, has been saying oil is going to recover in the second half. Youve had andy hall, its been a tough couple of years, still long term track record, bottom is now in. John watson, chevron ceo yesterday, on this network, bottom. Bottom is in. Others starting to call bottom. Jack welch on squawk alley. Thats exactly right. Before, you didnt know the downside. The bottoms possibly accrued at 25, 26. Now i know my downside. Now im taking a look at the upside. Im saying it could be significant. It just depends on the timing. I dont think were done yet with high yield in particular, because well see massive credit downgrades. Oil trades at 40, that doesnt mean these troubles are in less trouble. Theyre still pumping for coupons and that runs out. I have four people sitting in front of me who think the bull market is alive and well, weve just had a hibernation period. Alive and well and tired. I would add tired to my side of this whole thing. Listen, weve had two 12 plus corrections in the last seven months or so. Thats a meaningful market movement, twice in a row, that may actually take care of the bear market reset people are thinking about. And buying stocks . Yes. Sometimes ill raise cash. Judge, to the point of, you know, when you say financials are down, you know, 20 , and biotechs down 30 , you named all those different sectors at the top of the show, thats the very reason we can go higher. Because we have had those corrections. In other words, if all those were still at the alltime highs, if we were still whether its an ibb or however you want to measure it, if niece were all at the alltime highs still, then i would say, well, the greater fool theory, who comes in and buys them here at these levels . Enough of those have corrected so significantly that theres plenty of money to make by coming in there and buying them, not just the dash for cash, by buying chevron, conoco phillips. Weve had conversation almost every day as to the come back in certain sectors has been dramatic. Theres energy off of its lows. What about boiotech . I like biotech. Biotech was one of the leaders into the abyss. Why has it failed to come back . Because of the politics that are going on right now on both sides, in my opinion. I mean, its not just the democratic side. Its the republican side as well. There has been a bashing towards the biotech world, including even the big pharma names, scott. I keep looking at these names. Biotech was 40 at its recent low off of the high. Biotech has only rallied back 5 . When the market was up 1 ab actually up 2 , 2. 3 . Momentum cuts both ways. It carried it further than it should, and its dropped it further than you should. Theres a report put out by the government that said, pricing is actually it showed charts from the government, pricing has been coming down. Its the number of scripts written thats going up, and its population growth. Its the smallest component of cost. I dont think thats going to be one of the issues that either party attacks when they get elected. From a market at some poista jim, whats really changed, other than the fact that the dow and s p and nasdaq are 9 higher than they were at the low, fundamentally whats changed . Whats changed is that im not saying nothing necessarily has. You make the argument that things have changed. Right. Fundamentally whats changed is the market and its participants have grown accustomed to and are now can we with the rate at which chinas Economic Growth is slowing. Theyve grown accustomed to and comfortable with the rate of growth, low though it is but positive, in europe. Theyve given up on the idea that the u. S. Is going into recession. Thats whats changed thats the most important, scott. Totally agree. Everybody was talking just a couple of weeks ago, all about negative rates and all this type of thing. The sentiment has changed, to jims point. And some of the numbers have certainly changed, absolutely. When you look at whats really rallied significantly, judge, look at the rally in copper, in oil, in the commodity space itself. Iron ore and all the rest, i get it. And significant moves over in china in steel itself that have been part of this, which has been not recorded at all, but some of the layoffs theyre talking about in china. Think about that and take a look why a report came out last night, late last night from china, that theyre padding the purchases. Theyre doing it all, as i said yesterday, to get the currency out. And theyre even inflating agreements and prices and making agreements where theres no purchase of any materials. Nobodys buying this bull market on the belief that china is going to be a contributor going lower. I want to make this point. The s p 500 is currently at a level that it was originally at 20 months ago. 20 months. And during that time youve had three corrections. Three distinct corrections. So the question is why have we not had a bear market . Im saying weve had the equivalent amount of pain as a bear market over the last 20 minutes. Some would argue we have had a bearing mark market. Youre right. Im adding the numbers on the s p 500. You are correct, if youre a value investor, it has felt an awful lot like a bear market. Had an fed hikes rates again in the summer . Were so low, it doesnt matter. When i think of bull markets, i think of roaring bull markets where theres high correlation and basically everything is going up and its very forgiving. In this Market Going Forward you wont see the huge gains weve seen in 13 and 10 and 09. Plus you can get penalized if you misstep. You have to do your work and be more careful. You cant buy the market. You have to buy individual stocks. Well make that the last word. Coming up on the half time report, the debate thats raging on the half time report desk. Thats what i thought. Which president ial candidate is best for the markets . Up next, a strategists with nearly a trillion dollars under management weighs in with his vote. Plus the magic number for oil. At what point does the rally in crude start hurting the market instead of helping . Were looking at our crystal ball for answers. Can you see it . Where is it . And up in smoke. Cigarettes may not be healthy but theyre profitable. 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Saving humanity from high insurance rates. Welcome back to the Halftime Report. The s p 500 is up nearly 12 points, onehalf of 1 led by energy, materials, and technology. A stunning upset last night for Bernie Sanders in michigan, perhaps giving the underdog candidate some new life in his battle with Hillary Clinton. Well, on the republican side, donald trump picking up three more key victories. Joining us with what the races mean to your money is david lafferty, live today in boston. David, welcome, good to talk to you. Thanks for having me. You make the point here that in a trump versus clinton election, that clinton is better for the stock market. Why . Well, you know, its a bit counterintuitive. I dont think necessarily her policies would be more pro business and push stocks up. But i think she brings far less uncertainty. Trump is really the wild card. And i think the markets dont like uncertainty. You know, in terms of investors portfolios, it probably doesnt make a lot of sense to talk about total returns and how geopolitics will affect it. But it certainly matters in terms of the volatility that clients will experience. And i think trump brings more volatility to the markets. In fact you think the longer that donald trump continues to sort of rack up victories and the more apparent it becomes that hell rack up the nomination itself, that volatility is only going to increase . I think thats true. I think that as we get later in the year, as we get more results, and we approach the convention, i think its certainly going to weigh on the markets a little bit. Again, i think it will weigh more on day to day volatility. The bumpiness of the market, we tend to be longer term investors, so i dont know that it will matter two to three years from now. But i certainly think he brings far more volatility and far more uncertainty. And thats going to show up in june, july, and august in all likelihood. So what should we take from todays market . Last night you had a resounding defeat for hillary, a surprise. You have a socialist that won michigan on the democratic side. And you have trump, where others were doubting his strength going into last night, winning convincingly, and some doubting him are now throwing in the towel and saying hes going to be the nominee. And the market today is up pretty nicely. It would seem to me the market is telling us on a short term basis with basically no other news, that it prefers trump. Yeah, i dont know if the movement were seeing today is all about last nights results. I actually think were probably in more of a holding pattern, waiting for the ecb. I think the view is still that well see the forward guidance. Thats given a little bit of a lift to the market. You guys were talking before the break. I still think weve had much better macroeconomic news off the february 11th bottom. The last two to three weeks has been pretty good. I think thats what youre seeing in the movement today, just a continuation of the last a couple of weeks. I dont know that the market is discounting hillarys struggles in michigan and mr. Trumps strength in the other primaries. I dont think thats what youre seeing today. Is the bull market alive and well and just has paused a bit, or is it over . Its not over. Somebody in the prior segment said its not a raging bull market, and i would completely agree with that. I think we grind higher here on earnings. You guys mentioned the sevenYear Anniversary. If you go back to the march 09 bottom, since then the market basically has gone up 50 of that, of the increase in the price of the s p 500 has come from Earnings Growth, and 50 from multiple expansion. Earnings growth will be okay. But the multiple expansion game is over. So the market still moves higher from here in the long run, next year or two. But it doesnt move significantly higher because it doesnt have the tail wind of multiple expansion. You like financials here. Weve been speaking of sectors that have rallied back from the abyss. This appears to be one group thats done well. Yeah, i think the comment made previously is true. I mean, we talk about the markets broadly speaking. And i think overall, again, we struggled to move higher. It will be an okay market in general but not great. But when you break it up into the sectors, there are cheap places and there are expensive places. Financials, particularly the banks, we dont have massively optimistic expectations for earnings, but theyre priced as if theyre going out of business, and we think thats far too good of a valuation to ignore banks. Financials should have significantly better than market growth. On the flip side, utilities in this tech Interest Rate environment, people are massively overpaying for dividends, when and if the big unwind ever comes, the extra 1 or 2 dividend you made in utilities probably is going to pale in comparison to the underperformance of the sector. So overall, stocks look okay. As one of your hosts said, the real opportunity is within different sectors. Gotcha. Thanks very much, we appreciate your time. Dave lafferty. Were having a debate right now on this political question. Doc, ill give you 30 seconds. You tell jim why you think donald trump is better for the markets and hes going to retort. Well, i think david thought there would be more volatility going into the summer was because that he believes, as he ends up owning this nomination, jim, that its going to be negative for the market. And i completely disagree. I think he goes more towards the middle as we go towards that actual the Cleveland Convention for the republicans. I think thats going to be a very positive thing. And i think that on the other hand, many of his stances against some of the excesses on wall street are things the American Public will love. I hope youre right. As we always say on this show, hope is not a strategy. True. What im worried about in particular, you know im exmilitary, is Foreign Policy with donald trump. This is a guy who is prone to saying really offthecuff, off the wall remarks. So consider that youve got, say, north korea, who is also prone to making off the wall, offthecuff remarks, like, you know, im going to use a Preemptive Nuclear strike here at some point in time. How do you think donald trump will respond to that . I dont know. And thats what the concern is, because you really want the most serious person in that office to respond in a way that wont give the world the impression that maybe were going to nuclear war. I cant rule that out with him. What makes you think that donald trump is going to most likely move towards the center . Because i think overall hes a centrist. And hes a smart guy, and thats what candidates do. You indicator to the extremes like obama did, he catered to his extreme, then he got the nomination, went to the center, then back to the extreme. Thats what you do in the election process. I will say for hillary shes damn into ttuitive in the cattl market. She outtraded goldman in the speeches. But i think trump, people recognize hes businessman. What hes saying now is to get elected. Barrons is wrong again too, which made the argument over the weekend that Hillary Clinton is better for the market . You look at days when hes had big victories. The market is not down on those big days, judge. To davids point, again, if the market were so volatile and so concerned about mr. Trump and his successes that hes been piling su