Brown and john spalen zahny, chief macrostrategist with cig group. And spurred today by a blowout jobs report, many big stocks are on the move this hour continuing what has been a great quarter, and, josh, its been tech. Techs the best performer in the quarter. I mentioned all of the sectors that are ripping. Stocks like microsoft at levels not seen since january of 2000, nvidia, highest level since 1999. Yeah. Well, the last to break out, but certainly making up for that. Look at the xlk, the tech sector, s p circuit spider. Whats important here is, its slightly overbought. Shortterm rsi. About 73. Could see a little bit of a pullback there, but momentum is a positive thing. Not a negative thing. Turning our attention to the ndx name, 71 of the nasdaq names above the 200day moving average. Go back a full year to find that. The difference between now and last summer, accelerating. Last summer, that percentage was tapering off. Breadth is expanding. Leadership names are acting like leaders, and i think that its way more positive than it is negative. Doc, check this out. Social media, give you a few names from each space to give you an idea what were talking about. Zynga up 20 . A alphabet up. Old tech, qualcomm up, cisco, fang stocks working, amazon up, netflix up. Does it continue . Yeah it does. And when you look at the gold pro, its coming off, of course, a horrible performance, and this is one ive owned here for about the last month. Gold pro is up i think 27 , judge. Over that same period. All over, just the last month, not even the quarter, amberella, what makes gopro up, up i believe 20 . Does it keep going . I think it does. I think theres a lot of reasons that microsoft with the move not just into the cloud but, and the over with, you know, the distribution of all of their office suite via that and instead of having to buy that all on software, judge, i think this is a tremendous move and the microsoft move in particular has room to build. This, steph, is the rotation people have been looking for. You get the better jobs report, a great jobs report last month. Yields moving higher, yield plays fall out of favor and then you want to be, if you think the economy is pretty good, want to be in cyclical plays like tech. What ive said a while and obviously very early in saying it. Early part of the year, but i did think that the second half of the year setup was pretty goodened a the jobs report per spect in every way. Especially the wage number. 2. 6 annualized growth is a very good number. Upper end of that sevenyear range weve seen. Still want to see it grow and xmand. Gives me confidence the economy is the trajectory is on the right path. If we see a second half pickup you will see cyclicals outperform defensives. Im not abandoning the defensive trade. You still want a bargain. August is a trky month but i think youll see the second half of year set up very good. Noke a laggard and by the way, probably underweight on many Portfolio Managers. Knew that with apple, and that behind a big part of that move. A catchup trade for sure. Jon is this, in fact, confirmation of that rotation that people have been looking for . I think, yeah. I think also discounting the fact that something good will happen in november. Getting tax cuts, infrastructure spending. The fang stocks took off nicely. Really off the charts. I think, again, as jon said, microsoft going after linkedin, semis on fire. Sic cisco pays 3 dividend. Bag cap, old cap, nothing, but staying big. Not to mention the biotechs are rallying, merck, a little Biotech Company inside of it. Were seeing all of that money put to good use and good work and i think the rally continues. Josh, are the fang stocks back . I mean, i said facebook is up 10 in the quarter. After kind of being left for dead there. Are they back . Are they going to emerge as Leadership Group again . Maybe not. Because i think that the way to really feel about these companies is that the ones that can continue to outperform expectations, three out of four are, theyre their own story. I dont think people are trading them in a block. I think people decide i want to be long google, long facebook or add to these possessions. I dont think people are saying, put on the fang trade. These stocks, the good news is three out of the four of them look good technically. And continue to outperform expectations. Forget about the acronym. Company is doing fine. Fang and only fang last year. Thighs ye this year, fang and everything else. You mentioned all the names. So many good Earnings Report from this quarter and impressive, on average, technology 30 exposure in europe. Yet still able to deliver very good growth, very good margins operating leverage. I think it expands. Goes beyond fang. They can continue i think and also continue to think that cloud works. I think Security Software is a contrarian play and you want to look at some of those blowups were seeing today over the last couple days and still want to own some growth and value. No one wants to ring a register at all on the areas that have had pretty good runs and the stock . Whether cloud or elsewhere . Not yet. The fundamentals are still strong. Get around the valuations. Even facebook. Valuation at 31 times forward but the companys growing 45 , 50 . Same aamazon. Google probably cheapest of the fang and look at cloud names where youre going to see growth. I think youll continue to see the momentum there. By the way, oh, apple up 13 over the last month. Somewhat of a stealth rally, not so much. It had the big earnings boost that shut down a lot of the naysayers. Yeah. A lot of people true bears going into the quarter obviously and a lot of the bad news in it, we said last time. Those under calls worked out well. Going forward, you know, last time everybody said, apple tied to china bmi. Remember that story . All of a sudden china pmi rallies, apple railed a little more ar china pmi came out. The other thing going on. China healing, going to services. More fiscal spending there. Good story in india. Right . Just started a National Sales tax. What will they use that money for . Inf infrastructure . Build roads . Developing that company. Japan, same thing. Doc, you dont own the dofst. Anyone on the desk that doesnt. Why . In my portfolio, judge, i thought i saw better opportunities in other stocks. I still think ill get a shot to buy it again at 100 before they have the big announcement for the iphone 7. So i could be wrong about that, just like ive been wrong about getting into it too soon. What as technically, josh . How does apple set up from here . Looks great, but run into resistance to some extent. Needs good news to put it over the top. Good news about apple, meaning good news, pretty much no one expected 2itto come and a great setup in this name over the years, you kind of buy if in the middle of a nomansland in terms of product cycle and low and behol people get more positive getting closer to the cycle. Thats where we are now. A huge benchmark name. Over 3 . If youre yauunderweight that, chase. If you think fundamentals changed, a catalyst. Thats happened since reported. The quarter okay, guidance a little less bad than we thought, but we have, still waiting for the product cycle story. So the problem is that Portfolio Managers cant wait for that for a while apple was decoupled itself from the market. Is it getting back to a point where jobs report was good. If the market takes another leg, if the rally gets reignited one of the questions were asking, does apple go along with it or still remain its own story . I think its tougher to say that its going to follow that pattern, because the phone market, every year, becomes more and more saturated. More and more of the apples upside depends on people getting a replacement phone rather than the first person to buy a new phone nap said, the ecosystem is growing substantially. An area of the story people are more and more willing to talk about as it gets bigger and more important and new markets. So china is not what people thought two years ago. Still a new market. India is wide open. So there are things that arent in the stock yet, maybe a little harder to get excited about as the overall market rallies. To the extent you think jobs are improving and waging improving and the consumer has more money in their pocket, you could make a case for apple participating, if you think consumer is going to participate. I would say a little of both. Josh is right to a lot of his points, but in addition to if you think the economy is improving, stock should do well. And also the fact were in a bull market. Even though people dont want to recognize that fact. People are looking for things to buy that are down. Apple down on 92, and looking to put money to work. Thats not a bad place to be. I think we saw a lot of that money rotating it. The waiting, helping the diamonds and the qs at the same time. Theyre ripping apple, ripping qs too. A stallout in the rally if there was, stretch of eight straight down days for the dow, seven, eight, whatever it was. Only in that period. I was going to say the period dow only down 1. 4 . Its been in range. So does dotodays jobs report pivot us out of that range . Forget the weve moved. The overall market. Is the rally reignited because of what happened today . Yes. And the reason, look at xlf versus xlu, judge. Obviously the one with the fins, xlf versus the utility etf, look at the opposite dreshgz directi theyre going in a big way and then look at, like, online lenders. Take which is another area that benefits from. Look at brokers. T. D. Ameritrade. Schwab, moving 5 to 5 today. Look at though and then some of the Life Insurance names. The generworths get most of the year. 4 plus moves there. Todays the day to get into those . Finally . Yeah. Well, especially spg like a genworth ats 3 3. Got down below 2 not long ago. Lincoln lnc. Look at pru as well. Some of these i think metlife in particular judge got hit, i believe, just two days ago. Yesterday, yeah. Yesterday. And then that provided you with a great opportunity. So, yeah. Id say these could certainly provide that boost to the s p 500. And the Biggest Surprise to me is that weve seen the backup in yields as much as we have. So since july 8th, the ten year bond has gone up 20 basis points, and so today was kind of critics in my view that this report if it continued to see mo momentum, more upside in yields and banks and financials participating, horrible performers year to date. Get thez to go, maybe we can score card on the screen. Josh, you dont think that todays jobs report reignites this rally . I question the premise. I dont think the rally ended. I think weve been in a very, very slow grinding breakout, one sector at a tile. Today financials joining, nice. Look at xlf, completing inverse head and shoulders pattern. My point, and we got to this point in the market, we hit new highs and then sort of stalled out. We had a string of down days for the dow. People questioning perfectly natural. Let me finish. Go ahead. People questioned whether august would see some kind of correction. Yeah. This todays jobs report does it remove that . No. Could have a question next week. China could Say Something crazy sunday night. The idea that not talking about a 1 or 2 correction, but an 8, 9, 10 , real correction, gets people paying attention. The question is not could there be a correction . There always could. The question, are you ready to take advantage of it when it comes and different types of investors have a different answer. Some repair with diversification and markets zig and happening to zag, a cash balance maybe a short strategy. Without a doubt august is not a great month historically compared to say january or february, but doesnt mean anything, because look how bad january and february were this year . You can say things like, well, 60 of the time august is down. Okay. But nobody tells you when youre in the other 40 or not. I would not get worried about calendar, season stuff. Focus on improving be ining bree stocks doing getter. And now all of a sudden perking up, positive stuff and the fact its coinciding with stronger than expected Economic Data, a break outisnt the citigroup economic surprise index, not negative things, guys. Good stuff. What else is coming up on the Halftime Report. Announcer stocks may be hitting an alltime high, but wall streets biggest bear says, not so fast, and that stocks are headed for a correction this year. Plus top retail analyst david telsey upgrading to coach, putting a buy rating ton ahead of next weeks earnings. More Halftime Report with scott wapner in two minutes. Oh watson, your japanese is very good. Thank you. speaking japanese exactly. I can understand nuance, context and idiom in seven languages to help companies all over the world with everything from retail solutions, to banking, to cyber security. speaking japanese its time to discover that in a lexus suv. Theres no such thing as adverse conditions. Come to the lexus golden opportunity sales event this is the pursuit of perfection. Welcome back to the Halftime Report. Stocks at alltime highs. Our next guest is throwing cold water on the rally. The biggest bear on the street. Ben laidler, Global Equity strategist as hsbc joins us live from new york city. Welcome, ben. Thank you. You came in today with the lowest target. Wondering how youre feeling now after that jobs report . Certainly a good jobs report but were cautious on equities including the u. S. You have Economic Policy uncertainty, really high around the world. Brexit clearly didnt help. We think that has real consequences in terms of cap ex, Earnings Growth and the u. S. Is not immune. Context of u. S. Valuations on a 25 history, u. S. Earnings growth, still seeing down side from here and sentiment far from poor. Ill give you some of the things you said, but the brexit fallout seems to be overrated, at least for the impact outside of great britain. I think thats hope over reality. Havent seen the data yet and will see it over the next few months and weve been cutting gdp estimates in europe and in the u. S. And i think this just undermines further the earnings outlook, the cap ex outlook and again its happening at the back drop of a market riding very sharply, sentiment bounce back and valuations at the highest level weve seen in a very, very long time. Cap ex a concern following the most recent gdp report and we focused on that a number of times questioning what it means for the overall market and if it would cause companies to cut back on dividends. What if now you have another good jobs report that backed up the last one that companies actually start to feel more confident, that they start spending more . That they realize that the brexit fallout at least here in the United States may not be as severe as some people think or as it could be elsewhere . Yeah. The key to change our view is revenue growth. Really what were lacking glowly. You get that, i think the outlook is much, much better. Absent that, though, seeing yeartodate less than 2 jobs growth in the u. S. Very focused on services. Manufacturing still very weak. Business investments very weak and i argue those are the crucial bits for s p 500 earning and dont forget, wage growth continuing to creep up here. U. S. Corporate margins, 30year highs coming under pressure here. Absent revenue growth, the key, i think those margins get undermyroned and look where s p 500 earnings and expectations are for next year. Far, far, too high. The next story. Cutting those from 13 to 14 down to zero just like this year. Hi. I was wondering what you thought about the atlanta fed print yesterday, 3. 7 for the gdp . Yeah. I think the feds going to stay reasonably cautious here. I think theyre going to look for gdp growth to accelerate closer to 2 rather than the sort of 1. 2 of last yaur. Un un unemployment to come down. Pencilled in one rate hike only in the middle of next year. See how that pans out but i think the fed will move cautiously. Ben, appreciate the time. Thanks for joining us. Thank you. Ben laidler with hsbc. What do we any of his thesis, guys . I can see why hes cautious at least, judge. Not cautious. Flat out negative. Not saying short the market. He does have a 10 lowered target than where we are but i dont think hes saying be short this market here. Its interesting the way the fed and in particular, you know, the fomc focus in on, okay, forget about gdp. That doesnt matter. Its the jobs report. And if the jobs report was bad, which is was through two different months of the past four, then theyd say, okay, well, its really the things are going to pick up in the second half, to stephs point, and we dont need to worry about the bad jobs report. In other words, economists are always juggling these things. Ben happens to be one of the folks that has to do that on a broad basis for had. Sbc. I understand why hes cautious and dont think that anybody i mean, historic, throwing shade all over the whole global story. Yeah. And going to have to be cut down, that brexit will have a much bigger impact than people think. And when you test among the brexit thing, it hasnt played out yet. It played out for all of like 24 hours. That was it. We still have to see how that whole thing shakes out. Tone. Not willing to give it a total pass. I think europe is actually slowing and vulnerable. Read his note. More worried about europe and japan thersz the u. S. The point the market goes higher if earnings go higher. You have to, you do have to watch his wage comments that will tie into margins, if we just go higher. But i believe growth, second half of the year, will maybe offset where the margin story plays out. Keep hearing this thing about manufacturing is, you know, the underlying data its not coming back, guys. Youre anchoring to the 1970s. Kiss it goodbye. Were a servicesbased economy. Unfortunate. Maybe you want to see more things made here and improves a little but thats just not what we do. Let it go and looking a the services economy, its in really good shape. Getting in better shape. Were 70 consecutive months of adding payrolls. Not fake jobs. Theyre not people doing things required in this economy, and on the Business Investment front, lets understand, this is not a leading indicator. Business investment is not going to pick up until the signal is sent that its time. And that is not going to happen until we reach a certain threshold in the rest of the economy. When it does happen, it happens all at once. Its unfortunate. We obviously would like to see that component better, but housing is great. Employment great. Much bigger issues. Bristolmyers, plunging, competitor merck soars. Joining us with the latest. Plus from priceline to gm, the headline