Procter gamble, at t. I cant help but notice whats happening in the financials, as well. Well get into the down graids. But the financials, pete, kbe down more than 2 right now. Some of these regional names. Im not going to run through every name with you. But if you look at the kbe, it tells the story. Yeah. A lot of these regional names today are down more than 3 . Some as much as 5. And even the big names arent jpmorgan and some are down 1 . If you really look at the xlf, the bigcap financials, you get a nice picture of whats going on. Were still in that same range, scott. For the last month and a half or so, weve been in this range, and now we are pushing towards the lower end of that range. You look at the xlf pushing towards 23. I understand, i think the market right now, the selloff being started with when you look at some of the metals, pushed to the down side. The financials, absolutely, because they have performed extremely well, so there is profittaking. We have earnings tomorrow. We raised the question yesterday when we were talking about the dow downgrades at Goldman Sachs was cut. I think to a sell. Because of where the stocks have gone. And nobody on the desk said that now was the time to sell any of these financials. And i still dont think it is time to sell these financials. And i think you have to look longerterm. I think whats going on right now is healthy and i think its good. We have all complained for many years about the absence of volatility which really does not allow you to go out and achieve some rhythm in the marketplace. Economic uncertainty, policy uncertainty. Thats a good thing. Dispersion which has been low is going to move higher. Opportunities are going to be i welcome this volatility. I think its good. So you could do some hedging around the edges, have a longerterm perspective. Pete talks about financials. You mentioned the regionals. Take the regional etf, the kre. The regional etf still at the upper end of the range. Moved from 42 up to 56. Its at 54 right now. So were still at the top half of the range with a moment of truth coming. We have talked about playing the super bowl. Tomorrow we get to play the super bowl. A lot of bigname financial institutions. Kevin oleary, you said there were going to be crying eyes around some of the banks, specifically the regional ones we see getting obliterated today. Right. The truth is, and you know, 2 down is not a catastrophe. But its the beginning of a dose of reality. As you listen to trump and watch the campaign end and now the actual governance start, you realize, its going to take a long time before these regulations pass through any benefit to earnings. Particularly q4, q1 on regionals. Heres the bottom line. Regionals have really ugly Balance Sheets. They have got horrible Capital Requirements still there because of regulation. Theres nobody out there increasing their earnings estimates for 2017. And we had a lot of optimism. Look, i dont have a problem with the financial sector. But you want to own a Goldman SachsBalance Sheet, not some crappy little regional bank, which doesnt have any relief yet, and i think its going to correct much further than where it has. As you know, im on the record for the last 60 days, im short these regionals. I havent made any money yet, until it started today. I also think theres risk in the russell 2000. It had a great run because a lot of these small cap junky Balance Sheets, including energy, really got the 25 lift on the trump bump. But now youve got to pay the price, because nobody followed through the earnings bumps. I would be derisking, going for quality Balance Sheets on every mandate, because hold on kitty, were going to have volatility going forward. The derisking taking place in other parts of the market, too. Its not just the bank story. Its the one that we led with, with these big blue chip widely held down names. If you look every single day this week, whether its monday, p g and cocacola, wednesday with exxon and at t, now today disney and boeing. Whats going on . Let me just simplify the bank story first. Weve got the tenyear back down to 2. 31 . So number one, a gear to the tenyear. Number two, you have a steepening yield curve with 2. 6. 2. 31. So you see two things. The safe haven trade coming back into treasuries, when they should have gone back up, yields should have gone back up, particularly with the fed out there saying maybe well have three hikes. So you go to the downgrades. At this point i mean, there are individual businesses and individual industries. Do you see the pattern . No Growth Industries that had inflated multiples that should be coming off and also seeing a race to downgrade. So no analyst wants to be last. Research they want to get their names out there, so this is the way to do it. In terms of disney, thats not a research downgrade. If you take a look, its almost a ridiculous downgrade because youve got a fundamental analyst saying, my my riskfree rate, which right now in standard models is going to actually over 20year, which doesnt really exist, of 2. 89 , 2. 69 , i dont want to get too technical in terms of valuation models. If youre looking at your cost of capital, youve got a higher cost of capital. This he talk about that. But fundamental reason, too. Soft tb audience trends, ongoing erosi erosion, subscriber base. My view of disney, im not buying disney here. Its gone with the stocks moving up. Im not going to sell any seller. Im waiting for a better entry point. Espn is, i think, still atrophying a little bit. So many more viewing options for sports. Theyre going to sell you cant ignore the studio and disney. You cant ignore the studio. Were going to get to disney in a second. The broader story were trying to tell, youve got the street pulling the plug on some blue chip names. Sure do. And to me, scott im wondering whether investors should be doing the same thing. Two things that matter to me. Weve touched on some of these. Policy uncertainty. Lets think about this with regards to the financials. A lot of the financial thesis, deregulation. But note that in the first week and a half of the new congress, nobody has brought up deregulation or easing regulation on banks. What have they had. They have had their plate full with confirmations and the only thing discretionary they have done is to start taking down obamacare. So i think the market is looking at this and saying, whoa, maybe we got a little ahead of our skis on deregulating banks. Lets see what congress does. The other the second thing that is most important to me is earnings. And it really starts in earnest tomorrow, thankfully with the banks. Well get to see what ceos are saying in terms of the environment, whether there is any enforcement going on. And next week well get more diverse earnings. Thats where we really need the proof the earnings recession over the last two years is over. More so than that, we had a press conference yesterday which you would say was more reality tv, right, than president ial. And then you get the budget vote yesterday to remove obamacare. And its not what you would think by listening to how do we have this powerful republican conference. Exactly. Thats exactly right. You have 5148 with paul dissenting. Thats not an overwhelming majority. So youve got to be a little worried and i dont think its coincidental between those two events, the press conference and the vote, youve got the market down today. Because that 5148, that could be the other way very simply. I dont hear anybody talking about the dollar, you know. Yeah, well, i was going to actually get to the dollar. The dollar is incredibly important, one of the reasons why oil is up. Above 1200 for the first time but the dollar and these blue chip downgrades. The dollar down for the year so far. And kevin has got a few. My view might be a little bit different than kevins. We both could be right, both could be wrong. Thats how the market ultimately will play out. Kevin is 100 correct. If you dont like the financials, you dont like the russell 2000 index and thats the place exactly you want to attack. Also, to your point, if the dollar is going to correct with what its doing, boy, you dont like the russell 2000 index and the environment, as well. You go to petes gold and look at some of the energy names. Kevin . Heres the thing. We have this tax reform proposal, which if you really drill down, and i think this is really worth watching, if youre an owner of large cap stocks that have 48 of their earnings outside of america, thats basically where the s p big caps are right now, almost 50 . If these proposals get there through with this concept youre domestic, you dont get taxed on you input costs, but taxed at 30 , netnet, that drives up the dollar skyhigh. Thats on my radar screen. I dont want to get too technically complex. These proposals are trying to accommodate the vat tax that every other country has. Talk about canada, europe. They all tax value tax on transactions. And were trying to get out of that, and never impose it in america. Bottom line, its going to cause the dollar to go up. Youre not going to like the outcome of that in terms of how uncompetitive it makes america products. So im a little worried. I would rather see tax reform done without such manipulation around something called a border tax. I dont know what that was until 48 hours ago, and i dont like it. Lets jump to Michelle Carusocabrera with a news alert. More on Marine Le Pen. She was seen in trump tower and may be there in the grill eating with her team. But we now have a statement from Donald Trumps team, be sean spicer specifically, saying that Marine Le Pen is not meeting with donald trump or any member of the Transition Team today. So why she is eating in the grill at the trump tower at this point, is a mystery, scott. Maybe its those taco bowls he likes so much. The nike store right there. Is that the same place that vanity fair had not so nice things to say about it. Isnt that right, michelle . Thats right. Im sure a french woman would love to eat place so poorly recommended. Let us know what else you find. Thanks so much, michelle carusocabre carusocabrera. Back to disney, the analyst to dropped the hammer on the mouse house. Brian weiser joins us on the phone. Welcome back. Thanks for having me. I with one person on the phone calling it ridiculous. Do you want to defend it . I think the market is not accounting for risks in the Broader Market and that is going to hurt companies more broadly. Uncertainty should normally be considered a bad thing and anyone who thinks were going into more certain market rather than three months ago is well, thats not a view i would agree with. That said, i recognize it. We are not market strategists. We are not political analysts. Were just paying attention. And i think the opposite of not accounting for those uncertainties would be disingenuous for any analyst to not consider them in their price targets. Just to be clear, im saying its ridiculous as a research call. Youre making the call on rates there. The cost of capital. Youre making a call also basically on a discount rate and what their cost of capital is and the equity risk premium, the erp in terms of your call. What i read through all of your calls, not just focused on disney, but your entire universe. Thats absolutely correct. There is this is not a fundamental change. And, again, its not the kind of call that i think most analysts want to spend their time on. Because, again, i think most of our clients, Institutional Investors, come to us for to talk about the fundamentals. But, be again, if were going to be in the business of having price targets, which i think a lot of people still expect, certainly even Institutional Investors still want to hear where the stock is at the end of the year. If you dont incorporate a view. And a consistent view. As long as our process is consistent, you can look at our numbers and see where we are. So we reported gdp of 1. 5 , next two quarters, what happens to and the fed comes out next few meetings and says, you know what, we dont see any rate increases over the next year. Whats your disney price target going to then . Again, you know, its as the year changes and the cost of capital changes, our price targets change. Right . I mean, we could talk about the fundamentals. You know, i have a question for you. We should talk about fundamentals and we can do it with kevin oleary, a disney bull and long a stock. I am. I appreciate your information and your looksee at this stock. I have a basic question for you. Lets say i go with your recommendation and sell disney today and want to keep an allocation into content. Show me where i re deploy that capital. Where do i go . Fox is interesting, the one name, very positive about on a fundamental basis, and at a pure valuation basis. I think the sky turns action which i think a lot of investors are really concerned about, because of the leverage it will apply as well as the potential to pay more than they have bid so far, the regulatory issues. And suspending a buyback. I know thats concerning to a lot of investors. But there are a lot of real synergi synergies. This is not the same as time warner and at t which i think has very limited synergies, also still a buy, by the way. If you can get the price at t is offering and the deal goes through, thats do you think that deal goes through . I do. And, again, i think that the at the lower levels of government, i think you probably will get a lot of the optimism that a lot of investors are expecting at the ftc, the fcc, i think you will get more of the lets call it conventional orthodox republican appointees in a lot of places. So i do think that goes through. Despite the rhetoric at the top. When it comes to fundamentally driven value, i think when i look at what sky is doing, and trying to develop distribution platforms in europe, above and beyond the satellitedelivered properties and what fox wants to do in the united states, certainly where they have put a lot of resources and time and effort, whether fox wants to apply sky and appoint a parallel tool for direct consumer platforms, there is a lot of synergy there. Sky by itself, both sports rights and nonsports alike. They want to compete with netflix throughout northern europe. I think you look at their content, a good shot at doing so. So having a common content packaging business between those two is i feel a lot of value created there. So very optimistic about fox. Im going to run. Thanks for your time today. Brian weiser. Lets kick around disney. What point do you want to make . At 85, which is his price target, that would put the multiple on this years earnings somewhere around 14 to 15 times, below any multiple disney has traded at in the last five years. I wanted to see him defend, going to a low multiple, especially one in the studio, which none of us talked about, doing so well, whether its whatever iteration of Marvel Comics coming out or the star wars franchise. I dont see it happening. Is that in the stock, is that the reason the stock is up at 107 . I think it is. You know whats also in the stock, scottie, everything he was saying about tv viewership. I just dont know how you get to that im going to call it at least for five years, passed, historic low multiple on disney. Kevin asked a question in terms of portfolio management. You take disney out, what do you put into it . To where it is now. A lot of Portfolio Managers tried that game. The issue you have going forward, is if disney continues to go higher and now you have moved out of it, you created an environment where disney goes to 125, 130, just on that process alone. Thats the scenario, far more likely. Thats the scenario. Also, when he talks, and hes not on the phone with us right now, so its tough to address this. But when he talks about the absence of certainty and surrounding the succession, thats a finite moment. Thats going to happen. Youre going to get an answer to that at some point. Not the only one raising that issue. The guy to my right, pete najarian, talked about that as being one of the reasons why he has been apprehensive over disney, over time, is because of the lack of clarity on that. You know i doubled up not only got in there in the 90s, but added to it because of the optimism. Youve been thinking about it. Absolutely. Is and the other thing to consider right now, how about jpmorgan . Today, by the way. Today, the same day. By the way, if you go back three or four days, thats where disney was in the high point in the last quarter. And now all of a sudden yesterday you hit the highs. Whats going on right now, this is an analyst who has been wrong, lets be honest. Hes had this thing at a hold. Now its above him. So now hes trying to double up with the sell on it right now. I want the analysts ahead of the curve. And i think there are multiple analysts out there right now ahead of the curve. And the Healthy Trends that jpmorgan speaks of, the reason i continue to hold on. Lets move to another dow component now being thrown into the doghouse. And it is apple. Shares are lower following comments by investor, peter thiel who said the age of apple is over. Hes right. Look at the latest announcement. Theyre going to get into original content. Who hasnt, right . I mean, even the individuals have gotten into original content on youtube. Their own channels. Apple is late to everything. The Second Generation of theyve always been late to everything, steve. I think thats the one thing that no one picks up on. When you look at what steven jobs did, he made everything better. They have always been late. They have always been last the iphone was new. Let me tell you something how about this. How about in china, they got 80 of the highend market right now. And china is they didnt come up with the mobile phone first. They just came out with the best. The best, right. And always make mobile phone was much better. Technology was cuttingedge. They have not grown their Service Business really . They havent . 11 , 14 , 20 , 24 . They have not grown the Service Business the Service Business alone would be one of the fortune 500, one of the top numbers. The Service Business extended past their user base. So wrong. A billion users. I dont know what youre not seeing in this stock. But its pretty interesting. Im looking at the stock there is a reason why the stock goes higher. Im looking at the lack of innovation. One quarter in which phon