The tape in the hour ahead. Joe is today a day to sell stocks . On this rebound of sorts . If you are an investor, then i think over the first couple of weeks of september, you want to take cash levels in terms of equities holdings, somewhere 20 , 30 . Im fine with that. I think the market is in a vacuum right here for an investors portfolio, yes, i would be modestly raising cash. If you are a trader, and i think what land on friday and whats happening today is a trading event. Then youll be using options and hedging etfs on volatility and things of that nature. The play of the market over the next couple of weeks. I think thats more a trading circumstance, and i think whats going on in the market right now is a trading event. Lets just put this out right on the table right now. I any yellin has the votes. I tried to dissect them. Its up behind ow the wall. Foels, what we are looking at is my best guess of who is where, if there is a rate hike on the table. I would is stan fisher and eric likely saying yes. Ive got janet yellin based on her one comment at jackson hole about how something could happen next couple of months. Bill dudley could join her and James Bullard could go either way. He is possible. I have i dont know where jay is. Your headline is liesman, cole, and i think they might do it. I wish i could be more definitive. Can i ask you a question . Sure. You thought it was a trading event. Are you saying it was not a fundamental event . You say it was just traders weak positioning or was it a reaction to the fed . I think it was i think its clearly traders repositioning market right now in terms of volatility. The feeling on friday was that the fed could hike a quarter point and the world as we know it would end. Thats the way the markets seemed to act. The market is not acting assist if it anything. Its machines trading with machines, and then at the fringes you see some people reacting to what the machines are doing. You are not forced at gunpoint. You are not at gunpoint forced to react to one days tooit, and i will remind everyone here at the table, probably you know this as well, we have had 30 instances of negative 2. 5 days in the s p going back to 2010. Every single one of them so far has been a buying opportunity. The market has doubled since that time. If you are going to take one down 97 day, so 97 of all volume friday took place in stocks that were down on the day, youre going to take that and say everything has changed . Historically you would be very wrong. That days of points Means Nothing to getting asset the incremental move Means Nothing. The Bigger Picture view means everything. It means they are now on the path towards tightening policy in a more meaningful way than theyve been in eight years. Well, we know theyve been on the path anyway. Theyre just continuing down a path. I think the path is going to be shorter than what theyve led us to believe. What i go back to i know you spoke to this. This isnt reason alone to tighten, but the average peak in rates to drop in rates during recession is 550 basis points over the last be lucky to get half of that. It will cost them we dont have it. Brainerd speaks in less than one hour. 1 15. Okay. In a little more than an hour. Is she a Voting Member . She is. Shes a governor. Shes a permanent Voting Member. Shes also one of the most dovish people. His point this morning of whats the rush doesnt mean as much . He radio he flekts a view on the board that doesnt i only have the voters there. I dont have the nonvoters. Heres the other thing. If it yellin decides she wants to hike, she probably has nine or ten votes nine votes to go with her because i think the governor is more or less the governors will fall in line. Its been since 2005 that a governor descented rather than a president. In general, theyve descented when they have on the side of being easier. What are the chances of looking at your spreadsheet there. You think people would change their mind before the official i dont think the chair will be on the wrong side of the vote. I think she will create a vote that puts her on the right side. Let in other words, give do you buy stocks or do you sell stocks . So look. Ahead of next week. Snoo heres the only concern i have about the market is that complace ece si. We saw that coming out on friday. You had rosengreen that was also very dovish tilt hawkish. You will either have brainerd come out and also tilt hawkish, and that will be definitely go in 22nd. I think theyre going 2 itnd. You have to keep some powder drive. 20 whatever it is. There is buying going on out there. People are waiting for the dips to throw money at this. Whether its Portfolio Managers behind their benchmarks with too much cash. The fact that it reversed like that indicates that stocks are going higher at 25 basis points. I think its the machines. Its even better than that. Look whats recovering today. Youve got sphb, which is the s p high beta etf outperforming the low version. You have a bullish engulf willing candle at ibb, which is pure Risk Appetite going into biotechs here. The banks held in friday better than all of those dividend plays and mobile plays. You have a lot of things beneath the surface that maybe dont make the headlines. It tells you this is the market adjusting. It is not the markets freaking out with their hair on fire. What happened last time when the Federal Reserve hiked . What happened to the market . The market over the next 30 days went down 20 , and then proceeded to rally throughout the remainder of the year. Did you want to follow along with that trade in the 30 days . The question that you wanted to be in the position the benefit of that trade, in that if you were all in before the meeting what is important to understand is the you come out of the earnings recession in the next three to six months, the market is going to skyrocket. Craig johnson 2350 is the tech market. You dont think that the fed is going to raise next week and its going to cause some kind of panic in the market of greater proportions than were used to . Absolutely were holding the line at 2350, and i would add to this conversation of where are the Portfolio Managers at this point in time . A lot of the Fund Managers are slightly behind their benchmarks for the year, so any of these little shortterm call them selloff ins in the market, theyll view that as an opportunity to be buying stocks. What you are seeing today is some of the higher beta stocks getting purchased right now, and theyre trying to play a little bit of catchup. I suspect theyre going to try to play catchup into year end, and youre going to see this market move higher. I think 2,350 is in the cards. What happens in theyre afraid the market will go down even more, and they dont step in when you think they should . Well, today is evidence that they are stepping in. We have a 7 down day in terms of the advanced decline on from friday. You got good support on the s p, and below that you are rising 200 day moving average, and the longer term secular trend of this market is intact. I would also just add, i agree you got to look at the longterm trend of this market. We were at a 13year secular bear market. We broke out. What we saw in february was a pullback retest, and were starting another leg higher. Craig, its josh brown. In addition to price, what would you say would be the second most important indicator . Are you looking at it for example, percentage of Stocks Holding up trends above the 200 day . What should investors watching the show and trying to follow along some of the things youre talking about at home, what should they throw up on their screens . Absolutely. I mean, watching the breadth of this market, and its amazing. Coming off the february lows, we had 6 of all the stocks in the market above their 40beaweek moving average. Were in the 80 range now. Typically you get up into the 90s and right now that breadth is still expanding. Excludeing what you have seen on friday. Directionally its still improving. I would be watching that, and i would also be watching the overall trend of this market and trying to relax. Follow that primary trend in the market. Higher highs and higher lows what we want to focus on. Is this poorly a technical call . Evaluation doesnt really warrant you getting up there. Valuation on 2016 or on 2017 . The numbers for 2017 look pretty good. Kind of seems to me like its exiting out of this. If you can holding multiple flat, you can justify that 2,350 number or perhaps even more. You think stocks are cheap or expensive here . As you roll out into next year, again, theres going to be opportunities to see that stocks move higher, and not see a lot of multiple expansion. I think you continue to stay kind of around this 60, 60. 50 numbers. If i get the fed going now, and i do believe i think theres very little chance they dont go in september, and i get them going again in december, ive got a stronger dollar, which means that ive got weaker s p earnings than where theyre forecast right now. Thats 40ers approximate of the s p thats under pressure. I dont see how i get the earnings forecast that perhaps youre looking for, which means that theyre overvalued based upon where were seeing the s p. Well, i guess the question comes down to you look at the kind of job owning from the fed. Dovish. Hawkish. Back and forth. What i think youre ultimately trying to see happen is how much of this is already baked into the market . Is this 25 basis points baked in . The last thing the fed wants to do is surprise this market and push it meaningfully lower. As long as we stay in a trading range for the dollar between about 92 and 100 on the trade to the dollar index, i think equity will be fine. You wont get a big head wind to the earnings estimates, and i think youll be fine as you move forward into 2017. I appreciate the time very much. Well talk to you soon. Craig johnson with piper jaffray. Biggest price target on the street. One of the issues i guess the fed has to deal with is if they do hike, they must not believe perhaps that if they hike, its going to cause a big hit to the market, which will in turn cause a potential hit to the economy. What i think theyve tried to do is to create the option to hike by getting out there with the series of comments, yellins comment followed by fishers comments and comments from dudley, comments from guys like lockhart who said that the fed would try to compare the market for this. I want to push back against steve here. Steve, the way i look the athings is the fed is in play when it makes a mistake. I think the odds of that are what are low here. I think you can get a quarter in september. Maybe a quarter in december. I dont think you get much more than that unless the economy is showing that it can with stand that. I dont think you get this kind of move to the turn theyve been over the top. Ive said before, you can trade the fed up on raising rates or lowering rates, but the real way the market trades the fed is on the chance of ae mistake. Isnt it better some will say after the ism reports, both of them were ugly, and the jobs report was below expectations. Isnt it better to wait and see what the jobs report is next time and see what the isms are next time . Whats the rush . You could wait, and the reason why ive changed my view talking about the possibility of the rate hike is because i appear to have overestimated how much the fed is thinking about the isms. They clearly seem after the is came out and guys like rosen is looking through them and not i dialled that back. The big difference with the comments was that he was specific in not being dataspecific. He said im worried about the economy overheating. That was as you pointed out after the ism survey. He was in my mind the first guy who said to heck with data dependency. Im worried about it overheating the dollar. These kinds of conversations are why this really big Money Managers that i have talked to say this market is impossible. Its an impossible market. Possibly from an alltime high. Whats impossible . Its possible because theres an absence of volatility that active managers need. You are finally getting a little bit of that back which is a good thing. You dont know if the fed is going to go or if theyre not going to go. Let me finish this one point. The first cut the first raise that hurts, all the other raises of history shows us dont really matter. The market goes up through them over the next year. The first half slowdown. Rise in overseas risk. They have seemed to have passed. Looks like the Third Quarter is doing better. Theres a bit of a rebound in the beta. The rapid rebound for the current quarter. I would just caution do not make the uncertainty surrounding the fed a proxy for your uncertainty surrounding earnings and the economy because those things are uncertain, scott. We dont know where the economy is going. Nobody at this table is definitively told me they think the earnings recession is over. If you tell me thats okver, i will tell you the fed doesnt matter worth a hill of beans relative to a double digit possibility of accelerating. When we used to analyze the size of the guys briefcase, we never had a headsup. Not ju the fed, but uncertainty surrounding the economy and earnings and whats happening overseas. All of those are the major uncertainties. The fed to me is a quarter point were going to wrap it up where, good stuff. Steve liesman. Halftime report just getting started. Back after this. One analyst. Two big calls. Why one of the top retail watches on wall street thinks its a no brainer in the battle between walmart and target. One is a winner. One is a loser. Jeff gudlochs double line is one of the most successful bond firms. A Top Executive there says the market is flashing warning signs. See what he is telling his clients to do next. Friday is rebalancing day for the s p. According it our partners at kencho, u. S. Markets historically trade lower one week after the 500 rebalances. With the dow and s p fairing the worst. For more on this, go to cnbc. Com pro. More halftime with scott wapner coming up. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Zblienk the tenyear note yield hitting its highest level since the brexit. Have they bottomed with talks that they could raise rates. With more on where the bond trade stands today, lets welcome in robert coern, with Jeffrey Gundlachs firm. He is exclusively with us today. Its his first tv interview as well. Its new is to see you. Thanks for coming over here. Where are we in the markets . Jeffrey made this comment last week that bond yields have probably hit bottom. That its the start of something, and its time to be defensive. Elaborate on that, if you would. Thats right. I hear a lot of bullishness on tv here today. We see a lot of emerging risks that we think that you are supposed to Pay Attention to, and think of it more strategically than tactically. There is one metric that we look a lot at. I think theres a chart available. Enterprise value to cash flows. The stock market is comfortable or used to looking at p. E. Ratios the way to value companies. The debt market likes enterprise value ebida. I this i it reflects a growing concern that evaluations are getting stretched. You are making the case by the chart that the market is expensive, that valuations are too stretched. Exactly. S p valuations. Exactly. By extension that bleeds into the debt markets because high yield, for example, its a loan to value analysis. If you have a high enterprise value, then you can put more debt on the company. If thats stretched, that puts the high yield market at risk as well. Sflo what does lets say a bond yields have hit bottom. We said its at 16 have 68. The start of something. What does that mean . The start of what . The start of a gradual process of rates rising. Probably gradually for a while. Then rapidly. Were already seeing the bond market question maybe that with the political season now both candidates talking about fiscal spending, maybe that drives inflation. Cpi number inching up a little bit. You see the short rates are clearly off a bottom. If you look at the chart over a long period of time, they clearly look like theyre ridesing. Are you making the case that the fed could lose control of the curve . Absolutely. The bond market is doing then you are saying they shouldnt hike. What should the fed do . The fed shouldnt hike. Shouldnt hike, but they could lose control if wage growth gets faster than expected. Whats the right answer. Not that you guys are policymakers, but sounds like theres nothing they can do. Theyre losing control. That doesnt suggest you raise rates in that environment, but, you know, when were talking about rising Interest Rates, were talking about over an extended period of time. Were not talking about next week. These are issues that are developing over time, and it might take several years to really play out. Its possible that we have really no movement for a while. So, robert, yeartodate, investors have been able against consensus to find opportunities in the high yield markets, to find opportunity in the emerging debt market. Do you think that the situation that will present itself here that you are describing suggests, okay, its now time to look elsewhere outside of those select Asset Classes and to hold back significantly. I think youre supposed to derisk. If you have an allocation to risky assets like we do at double line, you that i that risk down. You dont get out. You cant just stay uninvested. You take your risk exposure down. Even just a slowdown. In high yield, for example, theres sector that is we like, Like Health Care and technology. I think those are places to be if things start to weaken. Robert, how much would it matter if the fed goes whether its september or december, 25 basis points, and much like this past year is on hold for lets call it nine months. Maybe six months. Is it really the psychology that perhaps were entering a more hawkish fed that you are worried about . I think that, you know, with the what happens if they do . He saw in december a small move. It may be 25 basis points, but it caused a visceral market reaction. If you have a fed that wants to do this, arent they looking at the s p 500 at 2,140 and saying weve got the green light . If it goes down, you know, 5 , 7 , were really not that bad off. Were back to the trading range of the last two years. Yeah.