S p, nasdaq positive. Big story, though. What bond yields are doing today following that big spike in the yield on the tenyear note. Pulling back just a bit. Maybe giving some feeling of ease to investors today. Pete, boy, the commentary yesterday after delivering alpha was mostly negative from the biggest investors. How do you see the landscape . Volatility is back. Volatility is back. You follow it so closely. Weve seen an explosive move out of it. Weve been talking all the way back to july about this low grinding volatility and the fact that weve been trading on the vix between 11 and 13, and finally, we get the big spike this past week. We got a big spike in volume because people are back and now they want to be involved in the markets. I think theres enough concerns out there, scott. When you really look at whats going on, they delivered at this delivering alpha a lot of really gray clouds, didnt they . There was not a whole lot coming out of there. Bill miller stood out for me the most, and the reason i say that is he is one of the most bullish bulls. He talked about the s p 500, and the like the fact that he did calculate out some very individualized names. It was amazon and some of the airlines. He really did pull out. I think delta is his favorite right now of the airlines. When you really look at what bill was saying, he certainly didnt sound like everybody else. He seemed like he was looking through glasses completely different than everybody else at the conference. Heres a good point then. Is it a bill miller market or a paul singer market . Paul singer was among the most negative speakers of the entire day, talked about the possibility of bonds and stocks going down together that the risks now its getting dangerous. Let me put it this way. Bull, who is a great investor, has been a great investor for a long time, ledger investor, has a different perspective. He is a long only investor. He is a long only equity investor. If you look at the perspective of the other investors, whether its paul singer or its dalio or carl icahn, they come at it frr a more holistic way. Theyre looking at bonds. Theyre looking at the credit portfolio. Theyre looking at the spread. The tenyear over the high yield. Theyre saying not so much that were looking at a valuation, but theyre looking at theres nothing out there to buy. Thats what resonates for me of all the Hedge Fund Managers that i have talked to and investors. I cant find anything where theres a compelling riskreward. I can only find very, very little. Its not that markets overall are overvalued. They come to that almost from bottoms up scenario. Individual securities, individual asset classes. Im just not finding whats worth the risk. The question is whether were going to have some kind of meaningful pullback, correction, reset. However you want to phrase it. You think we will. Your target on the s p for the end of the year is 2000. Its the lowest of the major firms that we find on the street. I think the right thing to say is theres a lot of caution mongsz investors. If you look at which parts of the market have rallied it and done well so far this year, within equities, within s ps, its your low tstocks, your yied plays, right. They are trading at record valuations, and theres a lot of need for volume to stay low in order for the markets to keep these levels. The reason for our ka us is basically linked to the fact that theres perhaps a little bitcomplacency. I would watch for further correction and take advantage of that to turn slightly more constructive. Fundamentals are improving, but, you know, from fairly low levels, but i would say prices have ran ahead. There has been a reliance, and thats an understatement of Epic Proportions on Central Banks around the world. Heres paul singer yesterday from delivering alpha on what the impact of that has been and what it could be as they pull back. What they have done is created a tremendous increase in hidden risk. Its a risk that investors dont know or have faced about their holdings, and i think its a very dangerous time in the Global Economy and Global Financial markets. Tell you, part of john Singer Agency comments yesterday sent the yield on the tenyear ripping. Almost at that very moment. That pulled stocks down. Whats the most important thing to watch today . Its something were not talking about at all, scott, which is earnings. Weve been talking about Interest Rates for a long time, says and, look, i do think at 1. 7, 1. 75 on the tenyear, there is a natural tether with which Interest Rates are around the world. Im not going to worry about Interest Rates rising too much from where they are now. What i am worried about is earnings because this market the stock market really is priced for a second half pickup in earnings that should crescendo into 2017. We really need to see that. Well get the Third Quarter earnings season coming up in a few weeks. We need to see confirmation that the Earnings Growth is resuming after two years of flat earnings to justify the stock market where it is. You think the fed moves this month, next week . What is the whats at the heart of your risk in the market . You see what a 6 pullback from where we are now. Thats a good correction. The risk that i think we face number one is volatility. You mentioned equity volatility has been close to record lows the last two months. Its been in line with bond volatility. Not very typical. If vol starts to pick up, that could trigger a series of deleveraging events. Just to give you one example, systematic strategies. Theyre currently at 97, 98th percent ill. Very low. Longer than they were prebrexit. Any sort of pickup in equity vol likely results in some type of deleveraging and puts pressure on the market, and the other part we need to watch. I think thats a fair question. We need to see on the 21st of this month what happens to bank of japan. Do they continue to provide further evaluation. If yield spikes up, that could pressurize the market. You think a pickup in volatility is going to scare people and force them to sell . Not immediately, but what it will do is it will likely result in further deleveraging, and that could then eventually start to scare people, you know, result in negative sentiment, pickup in risk aversion. Ill make this quick, but to your question, i see a lot of retail flow. Speak to a lot of clients. Volatility does scare them. Certainly saw that in january, february. A lot of people did decide to sell out or at least reduce risk right at the wrong time. As we see volatility. It does scare people. We would have had kags prior to the election in any case. We would have had some caution. Theyre reacting because theyre active managers, even if they have a longterm view. Theyre reacting to what happened on friday and what happened friday was basically the fed threw the playbook out and said we dont care about data anymore. The three data points, both pmis and the jobs report, were negative. I will push back with you on this. Why did he talk about hidden risk this time . These people were warning about dangers within the market well before the fed on friday said very true. We may raise rates next month. Very true. The hidden risk that i think mr. Singer addressed very accurately in that clip that we played is exactly that you just changed the game plan, and the volatility that you are talking about, that just got reintroduced in a big way, and the volatility that jim is saying that his clients are worried about, its much bigger moves when you are at a 12 level. Its much easier to get a 40 move in vol than when you are at 22. Youre not going to see very many 40 moves when you are at 22 for the vix, but when you are at 12, its an easy move just as it was last some will have you believe that you should go long the s p, and you should short the tenyear treasury. But he is an equity guy. Right . Thats thats where a lot of people watching our program are. Whats the better call . To go long the s p now or short . We always talk individual stocks. Broader market trend. I think clearly if you take a look at history, you are going to see that the equity risk premium on the s p, which means that when its safest to buy, when you get paid most to buy on the s p, says is not at an attractive level. If you take a look at the valuation, meaning the yield and sovereigns, thats even more unattractive. If you have to put money in one place or the other, you are going to put it in the s p. If you take a look at whats happened with the rates, you can just say in terms of central bank, we havent really talked about this, if the u. S. Is not easy anymore, its a question when theyre going to tighten. Theyre not buyers. The ecb has said there are no more sovereigns to buy. Thats why were buying corporated. We dont know what japan has done. Theyre going to run out of their own debt to buy in the next year to 18 months. Theyre talking about buying equities as the ecb maybe. Theres no more Central Bank Buying of sovereign debt. Those yields cant go down. Theyve got to go up for that reason alone. If i can add a few thoughts. Please. You look at japan, government yields. You look at bond yields. If you look at even treasuries from a foreign currency perspective, theyve all basically hit skblzero or negat territory. Thats had spillover effect into equities. I referred to this term low vol. Its basically sustainable income stocks. Stocks that provide the 2. 5 , 3 income with decent balance sheet. Thats what has driven the market. If you look at the multiple price, its rerated quite a lot, but if you start looking beneath the surface, we estimate almost entire rerating of the multiple comes from a select 50 to 100 stocks. You freeze those, multiple has not changed this year. Thats i think when they refer to hidden risk, thats one of the risks they might be alluding to. Utilities, telcos, staples, safe havens, unchanged. If you go back a couple of years also, utilities have continued to outperform. Then you had health care the one sector also you say those are the places to get out. Exactly. Rotate from. Because theyve been the biggest beneficiaries of these macrotrends off central bank policies, falling yields. The market is exactly where it was last may. 15 months ago. Theres been no movement in the s p. Pete, if you are inclined to be a bill miller guy which i am. Im listening to these guys, and theyre talking about, well, all the money has been in these places, and theyve been performing. Yeah, i do think theres a rotation. Thats why i am not sure why youre quite as bearish because if theres a rotation out of those and theyre still going to be looking for equities and still looking for yields, sounds to me like youre telling me, look, tech, that sounds like a great place to be still. The semisounds like a great place to be still. There are places out there where valuations are great, the yields are fantastic, the Balance Sheets are incredible. By the way, many of them are still growing. If you look across and you look at what the earning season told us, there is growth. There was a low bar. You want to answer it . Just based upon the if i was in 1900, 1800, 1700. 2,000 means i expect some form of rotation Going Forward. Roughly a sideways moving market. Areas that have benefitted from a lot of these policies might be at a relative disadvantage in other parts of the market be it hek or health care. I think its an attractive sector. You could continue to see this. We saw 6 in january alone. Right. So are you just looking for a slow drip, or are you looking for that one event you just dont know when its going to happen for that vol spike . I think september. What im looking for is perhaps the next few days. Up until september 21st. Theres a lot of us going into bank of japan meeting, and theres some im not sure exactly whether rettic Going Forward. Will the degree of compensation resist or will they turn marginally less dovish . It could be higher, and you could continue to see further pressure in the market. Thats the rusk that im thinking. Do you think the market is complacent at that point . I think there is some complace ensy, both from a yield point of view and as we were talking earlier, from an equity vol point of view. If it normalizes, that could just mean some deleveraging, some parts of the market get flushed out, and then i would say perhaps turn slightly more constructive. As weve heard from others, tony dwyer who was with us, looking for maybe 5 pullback and then it becomes attractive. Big Money Managers out there are looking for the same kind of thing so they can actually get money to work. Thanks foreign coming out here. Thank you. Head of u. S. Equity strategy. Heres whats coming up on the Halftime Report. Apple picking up steam. The stock is up big since monday. Still time to plug in . Carl icahn making headlines at dlirg alpha. Lets not confuse stock market and the economy. I know maybe you dont want to hear this, but, you know, stocks can go down. Carl icahn hitting the markets, the fed, politics, and, of course, the herbal life trade. Before the break, if you think higher Interest Rates mean a drop for stocks, check this out. Our partners at kensho show when tenyear kreelds yields rise above 2 in the same month, the s p 500 rose 10 on average. Semiconductors, materials, energy, and industrials were top performers. For more on that, go to cnbc. Com pro. More halftime with scott wapner in two minutes. Builds an appliance, they put everything they know into it. But once its sold, there usually isnt a way to keep improving that product. Today, whirlpool can analyze iot sensor data from connected appliances on the ibm cloud. So they can continuously learn how customers are using their products. And how the machines respond. Harnessing data to make great products better thats what the ibm cloud is built for. This is the new comfort food. Harnessing data to make great products better and it starts with foster farms simply raised chicken. California grown with no antibiotics ever. Lets get comfortable with our food again. We are back. Take a look at the stocks of apple. They have been soaring. The rally has legs. Five reasons why apple is still skrening by. Theres the list. Samsungs most recent woes. Pete, among them its definitely. Quite a move. I think the samsung thing is becoming bigger and bigger. You look at the ecosystem. They point that out. I think that the most important thi thing, after they released some of the specifics about the phones and so forth, we all know the phone, the big percentage of what that really is for apple still. When you look at the phones and you look at the process or and you talk about its more water resistant than water proof. Its absolutely i think its cutting edge technology. Its much Better Technology than they had in the past. I know you disagree. Ill tell you what, i think that is whats propelling this. Thats why youre seeing record numbers at t mobile and sprint, and you start looking around. Why is there so many preorders . Because theres a difference. The phone itself looks the same, but what the phone is capable of doing, including the camera, which actually does replace the need virtually to have a regular camera, scott. Now the phone truly has this dual camera that actually is a difference maker as well. You still maintain thats not innovation to you . How can be it innovation when samsung and its innovation for apple. Samsung had the dual camera. Lg had the water resistance. That has been the story. Its something weve gone back and forth for a long time. Years now. Thats been the story for apple forever wru forever. They make things better. That becomes innovative after some time. I dont know that they made it better. Really . I think they did. The battery life. The processing speed. Their own chip in there. Yes. You can tell me that youve compared it to samsungs camera. You compared. You dont know if theyve made it better. Its innovative for apple, and i get that. It gives you a reason to upgrade your iphone. Now, i get that. The numbers are so blatantly good for the apple preorders, theres going to be a mystery behind that. Now, look its not a mystery. We just talked about it. Thats not the mystery. Its a mystery to you, about the it is a mystery to me. Clearly. Look at the numbers. I think i dont have anything how about the fact of the pods and everything else. How long has it been since you have carried a camera . Forever. Okay. Give me a reason not to carry a camera. I see it in times square all the time. Youre going to continue to why has the stock been running the way it has been . Well, because its what i talked about too, judge. It is that these damn things wear out. Its not true that you can take that thing for four years. In a year and a half the haptic is shot on my iphones because im a heavy user. Anybody else who is a heavy user and thats an awful lot of the people that are devotees of this country, are wearing the things out. Also, says when you have the things that pete talks about, stereo speakers built into it, the much faster processor, the a10 fusion, much faster processor. I would say i mean, for instance, when i got on the plane today, steven, you know what they said. Hi, john. Hi, john. Buckle your seat belt. Welcome aboard. Heres your bloody mary, sir. When i got on the plane welcome to teeterboro. Please do not power on any samsung 7. Please do not charge any samsung device on this plane. I get that. I get that. Clearly its better than the samsung. Attractive valuations. Asps, theyre looking for higher prices. Something that youre sort of talking about. Also the december boost that the stock may get into the holiday. Right. And as you know, apple doesnt release these numbers. The numbers were seeing right now are from tmobile. Tmobile, great carrier. One of the smaller players. Great carrier. Good carrier. Were talking five years. Its one big i love john and what he has done. Let me purse some stuff out. We dont know if theyll be around in five. Were missing that for a year the stock has been in the doldrums, and the shares have been changing hands. Everybody who road the growth wave in apple, it more than doubled from mid 2013 to mid 2015. Then it had to go through a yearlong process of changing hands from growth to value investors. Thats done. Everybody is now looking at the valuation and saying 12 times, 10 1 2 times if you strip out the cash . Were all in. Nobody is selling it anymore. Theres only buyers. This stock is going higher, just like it did after the selloff in late 2012. What did we talk about last week . If you get a chance this thing slams down to 105 which it did, well reload with more of the 110 call spreads. Im not looking for it to go to 115 and 120. Would that be great . Sure, it would. Im loo