19,000 for the first time today as well. Yeah. I think context is important here, scott. The russell had actually had the toughest time. A lot of that had to do with the huge earnings revisions downward because of energy and industrial and things of that nature. That is now reversed multiples expanding and weve seen the repair being done to forward looking earnings estimates. I just want to make a broader point, and this is really important. On the s p 500 it is not abnormal to make new highs. Its perfectly normal. Going back to inception, the 1950s, the s p 500 has posted 1,100 new closing highs on 5 of all days were making a new high. People looking at that in and of itself as being a sell signal or knee jerk contrarianism in general could be very expensive here. Its important to understand that this is not whacky. Its perfectly normal. Sell signal hitting these new highs. All four major averages, if you include the russell for the First Time Since 1999 or just a si signal this could keep going rather than a sell signal. That last point is spot on. I think you have to really respect the rotation thats happened in this market since the summertime frame. You have talked about sicyclica. I this i it will continue to do so into at least the end of the year. I think you have chase going on. I think you have no new news from trump in terms of the plans, so well speculate about better growth, better inflation, higher Interest Rates. That all favors the cyclical group. I think that is going to continue at the expense of some of the defensive stocks like Telecom Utilities and, oh, by the way i have some Consumer Staples joining the rally as well. You have a little bit of a broadening out. Industrials hitting a new high. Whats most impressive to you today . Retail performance . By the way, the recovery of growth tech is notable as well. If you say since the bottom of november 14th, if we want to call that the fang bottom, you got facebook up 5. 5 . Amazon up 10 . Netflix 4 . Google, alphabet 5 . Apple up 5. 5 . Three of those i bought on the dip. Said it live on tv that i was buying them. I was selling puts in amazon, facebook, buying call spreads in apple. Those have all worked out. Do you take it all off the table . No, i dont think so. I think that keeps going. Tech is the largest sector in the s p 500 followed by health care and financials. With that boost that were getting, the trump boost that youre talking about, scott, from the Health Care Stocks and from financials, we knew we would get and we were talking about it before the show. Steph, josh, and i, as far as the steel stocks. Theyre such small market caps. Ak steel is 2. 7 billion after a 65 run in the last month. It gets up to theres a scarcity there that i think is underappreciated. People look at the stocks. How could they go up every day . Well, if youre not long them, and you are running money and the year is coming you almost have to pay up for that exposure if, in fact, you want it. Its not ease why i to get. I also think going into the election or into the election day there was a huge amount of cash on the sidelines. You even look at hedge funds, they have the longest or the shortest net exposure youve seen in ten years. There was a lot of cash. The unexpectedness of this election, you did see a massive rotation thats been discussed endlessly, but it also meant in addition to an economy that we already saw rfs recovered in many positive signs, not the least of which housing, unemployment, wage inflation. The promise of fiscal stimulus in addition to the monetary foundation weve had. Super charged this. Money coming out of bonds and going into stocks, which is also the rotation has been happening, but you havent had bond money going into stock money. Its an important point. Thats an excellent point. I was going to ask you, what youre managing their portfolio. What did your allocation look like before election day and what does it look like now that weve had an already sizable trump rally . Well, thats i think always the problem. I think if you arent positioned i think you saw the massive rotation fast money chased to get into the sectors they think that will benefit, and i think some are a little bit overdone in the short run adds happens in this sort of thing. I think longer run you will see more money coming into industrials, into cyclicals, although stephanie just said we dont have any time idea of the timing or the form of any of this. Even when you look at the fiscal stimulus tax cuts. Whats realistic there . Did you put cash to work postelection . I did. I put it in the names in the growth stock names that i have talked about before. The facebooks that got crushed as simply for reasons of taking crash out of those as quickly as you could, and thats where the profits were. We saw that in january of this year, and putting new money into work. Additional players say we do have to change our allocations here. Those tech selloffs, that was a gift into the end of the year. That was santa claus. That took amazon down to 7. 11 or where it bottomed out at . It those were all gifs. I dont think you trade out of those, though. I think you hold them. In particular if you can write something against them, thats a great idea. Is that the best tell that fresh money was come into the market . When you said those stocks were going down, we said it was a sign that maybe money was rotating out of those names into one of the underserved areas. That was their back rallying. But you want to see this give and take when you are just below new highs about to brake out. You want to see other areas of the market that havent gotten a lot of attention over the last couple of years start to get flows. You want to see the 52week high list broadening out. You are seeing that money going to passive products, which means its really being spread out across a lot of Different Industries and a lot of stocks that typically get ignored by active managers. What did jeff see . Jeff gundlach, he said well get to 250, and maybe thats as far as we go. We got up to that resistance and stabilized. Were pulling back. I wont be surprised to see us be closer to a two hand than two and a half early in the next year. What about the notion that if consumers were allegedly spending on experiences more than in stores, says if you think were going to get a tax cut of some sort fairly quickly in the new Trump Administration, what do Retail Stocks just pure Retail Stocks do nay year where some of them have already had a pretty good go of it . Urban outfitters up 68 year to dpat. American eagle up nicely. Groupon up nicely. Dollar tree. The Dollar Stores. Some are specific stories for today. Signet and some of the other names. Is there new life in some of the pure retailers . You are talking about tax cuts and also higher Interest Rates. The two will cancel out each other, i think, but that said, better jobs, better wages. You think rising rates will keep people from going to the mall, though . I think it will keep them selective. Unless we see wage growth. We have 2. 6 growth in wages. Thats nothing to write home about. Sure is a heck of a lot better than its been the last couple of years. That continues to go higher. Then i think the consumer can, in fact, do well. You mention a whole bunch of stocks that have done well. Guess what hasnt done well. The department stores. The Traditional Department stores. We all thought it was the amazon effect. You know i like amazon, but i also Like Department stores. Theyve done pretty darn good in cutting costs. Do they get a comeback boost here . I think they do because valuations are so attractive. Lets throw out macys. Macys is up 25 yeartodate. But it got crushed it could have been a stealth move. I think stephanie i think theres enough there thats still attractive especially since they have the real estate angle too. You could pick your pockets in department stores. I just want to add that i think stephanie is right that the rising wage situation is more important than the tax cut. Not just for these stocks, but just overall. A lot of the tax cut money is going to people that actually dont need to spend it. Theyre already covered with spending, and actually thats one of the biggest problems weve had with these massive tax cuts is that you dont necessarily lead to velocity of money. They dont necessarily make their way around the economy. A wage hike for the bottom twothirds of americans absolutely does make its way around the economy because thats money thaes been overdue and people need to spend it. Does this keep going postthanksgiving . Does the trump rally keep going postthanksgiving . Theres a reality check. Maybe were too overbought. I cant stick with the retailers. The rally i was. The rally. The retailers, its always, you know, buy in labor day time frame, sell in black friday time frame. Were coming up on that time. Im saying its long in the tooth. You have to get through opec and the italian referendum, i think. Bank . Zblie think the fed we all expect is going to do something. Let me give you the data on that question. I think thats a lot for the market to get through. Six months out you are up an average of 3. 9 on the s p, and thats versus all other days where you are only up an average of 3. 6 . If you do that for the 12month, you are up 7. 8 versus 7. 5. New highs looking out six months, a year. You are actually in better shape than on all other days. This is a trending market. Its a market that is probably looking at a lot of money potentially coming out of bonds and going into stocks. Even when you are talking about the department stores, the money has to go somewhere, and you wont go after necessarily the high flyers, except we were given gifts awe few weeks ago with the facebooks of the world. You are looking for the undervalued sectors. The ones that are 12 p. E. All the cash has to come in, and small caps, thats been one big area, and that also is a risk. We had something on the screen that talked about crude and energy and where some of the stocks, you know, have gone since election day. What role does crude and energy play in the overall market discussion about where we think it can go or not . If it got off and ran to the up side, thats a bad thing. We get off and run crude going to 50 is a bad thing . And through 50. And i know that is what jeff curry was talking about yesterday, scott. What do i think is more likely . You put this many men i dont think any women in that particular room in opec, but you put that many men in a room, theres no way theyre all going to agree on something. I think its another broken promise and the are you saying opec is not socially liberal . Thats what im saying. What pz if crude does get above 50 . If it gets above and just holds, no it gets there and holds, its fine. Jeff curry from goldman yesterday was saying 50 to 55. Thats his case. What he is hoping is that they can take it into backwardation where that doesnt let the shale producers come online because they cant hedge out into the future. The spot is higher than the futures. I dont think they get there. I dont think its sustainable. That was jeffs case yesterday. Zpa maybe the dollar if it continues to ride depresses kmod if ity prices as well. Are we worried about the dollar today . I worry about the dollar every day. Absolutely i do. Thats certainly a headwind that i wasnt considering even a couple of months ago. One of the things that i thought about over the summer when the dollar was continuing to slide was that it was going to be a nice tail wind to earnings. Now you have to have better growth to offset a higher dollar. A lot of the thats the whole pushpull. A lot of the worry about the dollar before is it was going up and it was going up with hut muted growth. If you get growth, people arpt going to be worried about the dollar so much where. The offset is that it will help to depress inflation, which Interest Rates arent going to continue to climb, and thats also a worry. You know, its pros and cons. Good stuff. Were just getting started. Whats coming up on the Halftime Report . Like the financials. One analyst who rates their bonds as waving the caution flag. See why next. And a big call on the auto sectors. Calling for a change in direction. Let halftime be about your road map. Scott wapner and the gang will be back in a flash. One of millin this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of at t, and security that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. Chris kbhalen joins us live from new york city. Chris, welcome back. Thanks. Happy turkey day. Likewise. What do you make of it is runs weve had on the banks . Weve had an amazing reversal. For years now banks have been managing in a falling rate environment. Kind of in june when treasuries bottomed, they were thinking about a flat curve, but the fed raising bench marks and between the end of october and now really youve seen exactly the opposite. Curves steepening, spreads widening. The good news is if you are a bank or a nonbank in the mortgage business, you make money this quarter on your market. Servicing rights. You may lose money on the hedge, which is exactly the opposite of what we had all year. Sure, but the environment is clearly better for the banks today and expected to get even better assuming mr. Trump puts through what he says he will. No . Thats the sell side message, scott. Those low coupons are extremely volatile. Theyre not the same as a coupon with a six or seven handle, so you have a lot of people in the street that have had this extremely benign environment. Almost like an induced coma here at the federal open market committee, and now they have to manage real rate risk. You know what im saying . Its a very big reversal. You were a sell cider at one point, right . Why are you throwing shade on your peeps . They repriced to earnings very slowly. Me make money on commercial loans. A lot less money on Mortgage Loans because of the heavy degree of subsidies here uncle sam. Repricing those assets is going to take months and really years. What are you saying . Are you saying to fade the rally then . No. Im saying dont be surprised if you see surprises in q4 earnings. You could see significant losses unavailable for sale securities. Youre going to look for those in changes in Equity Capital which will tell you the magnitude of the duration hit that some banks have taken. If they were light on the hedge, that means the hedge loss will exceed the gains on things like Mortgage Servicing rights, and, again, you could have surprises in the fourth quarter. You know, we have forgotten things like longterm Capital Management and all the lessons of the 1990s when extending duration and things like Mortgage Backed securities conventionity really bit a lot of people quite badly, and thats the point im trying to make. Which banks are the least hedged . Well, the larger banks tend to face the markets about 5050 versus core deposits. Your smaller banks, theyre core funded. They dont have nearly as much market exposure to what were talking about spread expansion that sort of thing. The nonbanks too. Remember, it was a bloodbath. Early in the year. The hits were taken. Msrs. Thats going to change now. I think youre going to see a gain as the average life of mortgages extends. Prepayments are going to fall. People like quicken, for example, who have been very active in the refinance market are going to see that market dry up. People who have been focused on that business are going to have to find someone else to do. One of the reasons that jamie diment offered to stay is because he sees the up side in this looser environment. Versus the dog fight that he has had for the last eight years almost now. Well, i dont know why what jamie is thinking. Im glad he is going to stay, apparently. Two thing. Regulation is clearly headed in the right direction after years of punitive punishment from washington. Sure, margins are going to expand. Its just going to take time. Were going to have to be a little more patient. The street assumes when we see a change in the direction of rates, happy days are here again. Remember, the average life of a big bank balance sheet, somewhere between four and five years, that means theyre rolling 20 assets a year, and repricing them. We have a chart and a report we put out yesterday that shows that the benefit of low rates for leveraged players like banks and nonbanks too has been diminishing over the last few years. How much do you really expect dodd frank to change if at all . I this i that jeb will try to pass a choice act. We wrote that a couple of weeks ago. That has a lot of small things in it that come lattiveumulativ could be important for financials. Just having a republican in the white house and ending the spanish inquisition of the Consumer FinanceProtection Bureau is going to be a big, big lift for the mortgage market. That said, volumes will be done do down next year. Were having a great year. Two trillion probably in total originations. About half next year purchases will still be there, but refi volumes could easily get cut in half in the mortgage space. Hey, chris. What about returns . Return on tangible equity. Has been coming down dramatically over the last several years. Are we about to embark on that being a change . I think last quarter we saw actually goldman and morgan see a little bit better rotes and soive i im kind of curious. What does that mean for profitability . Well, theres a longterm secular issue here, stephanie, which is that the fed has been using low rates to goose employment, to goose consumer activity, and thats had a very affect on earnings. One of the things we highlighted in the report we put out is that the earning asset is only 10 . It used to be a full point. Ewe taken a quarter of a point out of bank earning assets over the last 30 years. Getting back is going to mean that we need to see Interest Rates go up to 5 , 6 . Thats not going to happen in the near term. I think that, yes, were headed in the right direction. Its that rates are so low, skps you have these portfolios that are filled with 2, 2. 5, 3 coupons. Its going to t