A lot of other people did. A lot of people were short going into the report yesterday and looking for the market to make that big correction. They did what we thought they would do and, like i say, steve still had the odds as far as they were giving him those odz yesterday, they were very good. It was a reasonable bet that maybe something would happen. It didnt. They just have gone out and jawboned again, judge, and didnt do it. So they lose a little credibility for going out each time that they do that but, nonetheless, i wouldnt be an aggressive buyer here because i think theres smoke in the house. Not saying the house is on fire. Saying theres smoke in the house and so you have time what does that mean . That means you have time between now and december to get your belongings together and get the heck out. Pete . You know, the one thing ive done, scott, the game plan. One of the questions they asked the producers before the show, what are you doing . How did you change your game plan . Im not changinging it. We were trading 17, 18 going back to last thursday. Weve seen nothing but sellers. On tuesday we talked about people are selling putts, selling calls, theyre selling premium. Look at where the volatility index is now. It went from 15 two days ago. Here we are trading in the low 12s. Were right back to where we were. Protection is cheap. It gives you an opportunity to own. It gives you a great opportunity to do some stock replacement strategies. In other words selling stocks that youve had that have moved to the upside and you still want to be in market, you can buy pu puts. If you think the fed is going to go in december, do you buy stocks up until that time or do you use pops like this to lighten up positions going into december . I think you can own stock going through. Were going to get through debate so there will be volatility. To petes point, i was looking it at the same thing today that you actually had the vix trade below 12. Anytime weve seen that whether its been a week or two weeks its been a massive opportunity to go long because the markets come crashing down and you see a spike. It doesnt even take much to get the vix to 15. Youre going to make money in the move right there. So there is some danger but i did increase my exposure. I did think the fed was going to go and it was a great setup because i made a few pennies. So id say, look, i think you have to be careful where you take it. Im not taking it in the commodities or in the industrials, and im not very, very long. You are missing an option. Theres three things you can do, right . You can buy stock, you can sell stock, or you can go f flyfishing. Thats what im going to do tomorrow. You with buy stock, sell stock, or golf oregon fish. Breaking news when he says this. Exactly. What do investors take from the fact 23eg9 they didnt move, there were three dissenters. Thats probably the most important thing that comes out they can lead the way or they can lead you astray. I think in this case theyre more likely leading the way. I think when you get a big bubble of concern, this is the way the fed is going. Those are are the odds, more or less, from the cme or citi group. The onus is on everybody else to change these three peoples minds or else theyre not going to go in december either. I think that other folks including the fed chair, if you listen to what she said, she said if things go the way we think theyre going to go, the committee as well as i think its ten people on the committee, have a forecast for one hike this year. How much of this and i know its not in the minutes. They obviously talk off line, how much of this do you think was a free look it at the election and how the markets act and you how the economy acts post the election . Look, i think yellen is right at least on the surface that its not a political call. I think and im not saying it is. Politics by nature of the calendar have to play into the conversation in the room even if its not so overt. Here is the other part of it. If you assume they are human beings, and the hearing has come out in a variety of reports that the election has increased business uncertainty, one fact which is that all the people you know say the election is having a negative impact on the economy already. The trouble is politically they can never say that politics are influencing the discussion. Would they make a move on rates with three dissenters. The idea is for the other guys right, right, right. Yeah, yeah, yeah. I was confused. I think yellen would go along. The two fed governorance wou aa governors would dissent. When yellen says the economy needs more room to move, that it could possibly bring down the Unemployment Rate further without igniting inflation, i dont know what that means exactly. The data. There are three jobs reports between and that december meeting it. If you could tell me with certainty what theyre going to be i would tell you what to do. Big name market watchers have been saying, we documented what folks said at delivering alpha where there was a little bit of a cloud over the mood. A little. Citron of Discovery Capital writes a letter and says a correction could be coming, could last three to four months, could be the biggest since 08. That in a note to his clients. We dont talk about him much. Hes not out there publicly but is well respected within the community. I know rob. Hes very smart. A great investors. Larry fink says stocks could fall 15 unless you get some sort of fiscal policy enacted. The fed is the only game in town and at some point its going to run out. Joe, we havent heard from you yet. Absolutely, great. All sounds good. Its the story of 2016. No one believes the market is going up. If you can trade your own p. A. , you have that flexibility, you have the good fortune, you dont buy stocks right here. Youre playing things like pete and jon are doing, youre doing derivatives. If you care about your job, think where we are month to date in the s p. It feels like a lousy date. The market is higher. If you care about your job think whats happened the last 48 hours, bank of japan, ten handles higher, yesterdays move higher, this morning another 100 higher in the dow and the market is not going down. What are you banking on at this point . Let me finish. A chart that shows the feds outlook for its own Interest Rates has come down and come down to where the market is. The outlook for the rates has gone down. You have a tremendous amount of capital. That is why hedge funds are underperforming. Everyone is so pessimistic. Bhar you bank iing on . If i say the market will be volatile, make the case how do you know that . The vix is at 12, scott. Today it is. As you get closer to election day, who knows the result. Theres a chance the market is going to be volatile right around the league after the election. Thats a fair statement. Its a fair statement i agree with. The reality does not suggest it is at 13. Today it doesnt. Make the case to buy stocks today knowing what could happen. Here is what could happen. The market continues to move higher. We go double digits on a year no one thought that was possible. We started down double digits. This morning im sitting there, im buying health care stocks, why . The tape is forcing me into the market. But thats going high er. Thats part of the problem. Look at all the people on the side to have that feeling of just to get in. Thats your mandate. Not necessarily the time. People feel this is exactly whats wrong. People feel, i missed it but im going to get in now. That it oftentimes signals closer to a top. You dont have to feel that youve got to be in this thing right now. You have to be very, very selective. How do you have this conversation in the absence of the discussion on what happens to earnings. Exactly. If you tell me a 6 bump in earnings, i could tell you to buy stocks in that context and i could tell you to buy stocks in that context irrespective of what the fed does. The Counter Point is irrelevant. Let me do this. Hold on. Let me get another voice in. Well continue the conversation because our next guest does say its time to be cautious following the fed. Joe davis is the global head of the Investment Strategy group at vanguard. Nearly 4 trillion under management. Thanks for coming back. Thanks for having me. Why be cautious now . Some of the commentary, i was thinking if that was the commentary at the fed meeting because we certainly saw some really con tension at the fed and i think its to be expected. Why were cautious, we went into the year cautious because of three things. Valuations that are certainly a little bit above historical averages, certainly the market is not cheap. We have a low rate environment which we believe is secular or long lasting. Not a cyclical phenomenon and thirdly a low level of volatility as well as most economists are having the same outlook. When we see the recipes, were not bearish on the markets but we remain cautious. I dont think investors should have outside risk. What about the idea joe is putting forth somewhat theres a lot of cash on the sidelines, people have a mandate, Money Managers have a mandate to get invested in the market, and theyre going to do just that and that could push stocks higher or at least keep them from falling to any great magnitude. Do you buy that . Well, i think there could be some credence. What i try telling investors is look through some of the short term. I know its not easy. Two things. One, investors should be executing on their plan, and we see that at vanguard. We see strong cash flows and a dedication to the capital markets, so thats one. Two is you want with respect to the fed and so forth, i think you want to look through and more focus on where is the Federal Reserve, where is the fed fund rate two or three years from now . Thats where were strong in thinking 1 may be the high water mark. Its not to say we dont have an opinion on september to december. You dont want to be heroic and aggressive. You want to be fully invested but i dont think you want to be aggressive in this environment. What does a vanguard what is the ideal vanguard portfolio look like . I wish i could answer ideal. As a reference benchmark you have a 60 equity, Global Equity mandate and 40 fixed income. You want to be globally diversified. Overseas investments the past year or two but thats one of the closest youll find that global diversification. I think the other weve seen a lot of interest at the margin in income proxies, dividend stocks and so forth. Thats where we have the most caution. It if theres a risk to the Federal Reserve tightening scenario the next several months, its not in my mind Interest Rate risk. Its the sectors of the market that received a lot of cash flow in avoiding that very risk itself. I think investors have to be eyes wide open. You say 60 global equities, where does the u. S. Fit within that allocation . Well, i mean, you start the global portfolio. You may back off and say 60 being the u. S. Dollar market. You want to have emerging market exposure. The u. S. Markets on a relative valuation perspective are at the high end, right, so our expected returns across all equity investments, to be clear, we went in for stocks weve had since 2006 but that said we are saying investors should be fully invested executinging on their plan but that means International Exposure despite some of the concerns overseas with their economies relative to the u. S. Joe, i appreciate the time. Thanks for coming to the vanguard camp. Joe davis over at vanguard. So lets talk more about what we should be doing in the market. Being fully invested and being cautious at the same time. So, look, youve had sovereign yields have come down again. Nicely negative. You have oats, french bonds trading very, very low, so that pushes you back into equities. So i think you can go into equities. You say lighten up on financials. That was the big that was perhaps the biggest trade to be watched pre and post fed. Ive topped it up into the trade because financials had not been tradinging up because of such low expectations. But there are still some values out there. I did add to my Health Care Holdings to biotech. Im not worried about the nylan hearings spilling over into biotech. To steves point about earnings, we are talking about earnings growing for the first time in a long time. Were coming up to an earnings season. Well get better clarity in terms of 17 now. Now im worried about draft margins, of course. If ivlow rates and an economy that i felt where we should tighten go 25, i dont think means anything to any asset class that i want to be a little longer equities. The and im not worried about a hike in december. Im worried about the election. Joe davis made me think about this, is the market trading with too much fear of the fed . You hear what he said. Yes. He said a 1 funds rate over the next two years. Means nothing. Im going to bet the average investor has in their brain a higher rate than that and thats something i think the average investor is huge. Im wondering if theres too much is the market trading with too much fear . Is the market trading with too much euphoria when the fed doesnt do anything. This move today of 100 points on the dow, is it due to anything other than the fed not making a move . I think, also, its due somewhat to whats happening in japan paradoxically because japan said we found another way for quantitative easing and you would have thought that they would have been worried when they said, hey, negative rates isnt working. Traditional qe is not working. Hey, games over. Theres something new on the table. The last point, too, we have to split. We have to talk about this next week. The Central Banks have finally figured out that the banks matter. What japan did yesterday is important because it recognizes the importance of banks in the monetary mechanism. Carney did this when he did his post brexit stuff. It will be a fine day in it the United States when the central bank here figures out banks matter. Which is one of the reasons i thought they were tightening. Theres a difference between thinking banks matter and thinking that bank stocks matter. Banks profit. When they figure out banks matter, they will profit. They figured out they cannot run a Central Bank Policy by undermininging the banks. Are they convincing Elizabeth Warren they matter . Forget about Elizabeth Warren. Its janet yellen. Theyre telling me we have to go. More Halftime Report coming up. Days after wells fargo ceo takes heat on the hill will you willingly give up your own bonuses ahead of the board discussion . Another sceo gets her turn. Do you think you were charging too much at 600 . Weve lowered that price by half. Why did you lower by half if you thought it was fair . Next up, the impact washington may have on mylan stock and the rest of the sector. And timber. Goldman sachs is in the woods. Its a call that could make you big money. More halftime with scott wapner coming up. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Hiim here to tell homeowners that are sixtytwo and older about a great way to live a better retirement. Its called a reverse mortgage. Call right now to receive your free dvd and booklet with no obligation. It answers questions like. How a reverse mortgage works, how much you qualify for, the ways to receive your money. And more. Plus, when you call now, youll get this magnifier with led light absolutely free when you call the experts at one reverse mortgage today, youll learn the benefits of a governmentinsured reverse mortgage. It will eliminate your monthly mortgage payments and give you taxfree cash from the equity in your home and heres the best part. You still own your home. Take control of your retirement today after mylan takes our punches, theyll fly back to their mansions and private jets and laugh all the way it to the bank while our constituents suffer, file for bankruptcy, and watch their children get sicker or die. All right. Shares of mylan are up after a tough day for ceo Heather Bresch on capitol hill yesterday. Meg terrell was there. Shes with us now live. Reporter scott, it was many hours of questions and kind of grandstanding like that for my lan ceo Heather Bresch about the rising price of the epipen. She didnt apologize, though some lawmakers asked her to do. They he ask why she couldnt lower the price of the drug, asked what went into the price increase. Part of her defense was the investment theyve made in awareness. Listen to this. I would hope nobody would want to go back in a period of time to where the awareness was so shockingly low and the access was almost nonexistent for epipens. We have continued to balance that access. It does come at the a price and weve tried to balance that price and access while continuing to have access in more places. Reporter also increase their sales so it helped the company as well. A lo lot of questions about why not introduce the generic system. Listen to this exchange. Were supposed to feel good because youve taken a drug that youre overcharging six times what its worth and youre going to drop the price to 300. Sir, we were receiving 274 out of the do you think you were charging too much at 600 . Sir, we believe it was a fair price and weve lowered the price by half. Why did you lower it by half if you thought it was fair . If you thought it was fair, leave it where its at. Reporter the company say in of the profits it gets, its only 100 for a twopack out of the 600 branded price. A big question for mylan stock, how much of a hit are they going to take for increasing the rebate programs . How much of a profit here of all of mylan is due to the epipen and where is that going to go . All good for people like Pete Najarian who bought calls in which Heather Bresch a combination of a couple things was going on, scott. Its been hit had pretty hard. Objeviously its something jon s talking about with wells fargo. Blood in the streets, correct . Suddenly its been getting hit, hit, hit, and its near the lower end. An area people have been able to buy the stock in the past. There were different circumstances for that. Why is the volatility so low . This is part of the art form that i think is so interesting. You would expect that implied volatility, the expense of those options to be astronomical based on what were seei