Eighth straight decline. But it is those financials that are the big story this hour. The worst month for the banks now in more than a year. Josh, what is this about . Is this all about rates, which arent doing what people thought they were going to do. I think rates is in there. Deregulation is in there. Weve been talking about this stuff for a while. I would point out, actually, though, that beneath just pure price action, momentum on the sell side is stating to slow down. Take a look at Goldman Sachs. Starting to form a beautiful hammer. Of course, well see where she closes, but that would be the type of thing youd want to see, to say okay, enough is enough. Also, scott r bear in mind, financials are still the Top Performing s p sector going back to the election and quite frankly, by a lot. So, yeah, theres been damage here. Along with a lot of other down 10 . Morgan stanleys down ten. All of this taking place within the last month. We broke down last tuesday i thought was a consequential decline than weve had in the past. We have not recovered at all. The problem is that youre getting this sell af at a time S P Companies are in that blackout window. They cant buy back the stock thats been important to lifting rebounds in the past. Does it mean a dramatic de . No, just means we might be in the mind set until earnings. Were going to have to reset once again. Do you step in and buy here today . I dont think you do that either. I think the most important thing is getding the calendar the to earnings. Kevin joining us on the phone right now. The chairman of the etfs. Youre not surprised i take it from this move move in the banks. You said the regionals were going to take a big hit. Many are among the hardest hit. Why . Because at the end of the day, its a combination f concerns on earnings and deregulation and on stalling, tax relief, which all come compressed the potential of what these names could have done in 2017. It looks to me that you start, you have to start dif wrennuated the risk profile of your Financial Sector holdings. I can see an argument for dipping your toe into goldman, but theres no reason to touch the radio active waste now inherited in regional banks. These are going to go down another 10 . Maybe even more. Look at the charts of these things, theyre going to separate to qualify financials because their Balance Sheets are really leveraged and the deregulation, lend more because their asset base would have changed given the them more power, more leverage. This is going to happen to late 2018, 2019. Thats always been the case. People treated these as if they were the same quality as the Money Center Banks. The these are really very high risk products. Very, very levered. Incredibly weak in terms of earnings possible. And theres a lot to downside. I was negative before, 10 is nothing. These can go down another 15 easily. To that point, youve got fifth third down 11. 5 in a month. Zions down double. Lincoln national, keycorp, hunt l ton, sun trust. You can go down the list. Theyre all down. Minimum of 10 . I favor the Money Center Banks over the regionals. Having said that, i disagree about the damage yet to come on regionals. Heres why. This is taking place because of what i think josh mentioneded. Why are vated come down . Because First Quarter gdp is blocked. Thats going to turn around. Fridays Action Congress does ng to rederail the trump agenda. Theyll get through tax reform and this economy will reflate. It is hard to see downside. What makes you think getting the other part of the agenda through is going to be a cake walk . Not saying its a cake walk. I think it will get done. Heres why. Because its something both side of the aisle can agree on. Its something the country needs. The these are the guys that are the fiscal hawks. You just lost a trillion dollars. So now, youre going to have to be deficit negative and if you do that, you need 60 votes in the senate, so to me, youre a lot less likely to get any reform. Chuck schumer i heard on television this morning certain lip didnt sound close to wanting to come to the table and push this thing through. Market rs banking on. Make sure youre not mixing things up. You mentioned the senate in 60 votes. Freedom caucus is in the house. The house and republicans in the house have taken a weet booeting and they keep going to the reelection having nothing to show. They know theyve got to get something done. Tax reform and infrastructure. Were veering off path of the banks. Do you buy the banks . Or is kevin correct . I think josh correct to point out Goldman Sachs. Clearly, thats a standout name. I think kevin to point out the regional banks have lost momentum. I agree with that completely. Toxic waste. I dont agree. I agree that they have lost momentum. Thats what i said. I think that oil has lost momentum. I think if you look at tcbi, texas capital, if you look at cullen and frost, cfr, tloez energy exposed regional banks where you can make a play in the Options Market in a Risk Management strategy to buy some puts underneath the market. Oil is a problem now. Its not going to the downward move in rates. Look at where the tenyear is today. Youve got gunlock saying its going to go to 225 if not below before trying to stage a rebound. Understand that the problem is is, they havent been that volatile lately. Theyve been going down. Not true. You see the ten year . Im saying wee were talking about a month. Rates are inherently volatile. Scott, since last summer, understand the rate on the twoyear treasury doubled, it doubled and right now, it sells where the eight on tenyear was last july. Theres volatility in the rates market. I wonder why. We had an election. Didnt accounts of whats going to drive gdpp. Possible trax reform in the air. We have the fed out there. Of course rates are volatile. So look at one or two weeks and construct an entire narrative for how you should position a portfolio for the balance of 2017. Frankly, i think thats a loser. I think theyre a long here. Because in general, people may have gone from way under weight to the at best. Still a ton of money looking to buy financials and get overweight. I think Regulatory Reform is more than tax reform. Bigger picture, this is really important. Banks are selling off, regionals are selling off more. Thats fine. Theyre still up a lot from the election. But bigger picture, you have small caps now negative on the year. Still outperforming since the election, but underper foming big time since january. Youve got now only 56 of stocks in the s p above their 50day, so you have a lot of lost momentum in almost every sector and thats the worth levels for that figure, so you have some damage. Not just banks and not Bank Specific story. Its a little bit of bloom quomg off the rose. Our point, well, thats our point. Not me. Thats my point. I bought into this trump trade thing and went head over heels. Paying the price. Zwl zbl youre 2 off the high. Kevin. Yes, my issue is with on the financials, if goldman is down the same percentage as some regional bank, which is basically what happened and youre looking at going back into the sector now, you havent seen the remainder of the downside yet. These are not the same risk profiles. On the downside, that will not be the case. The small regional banks are going to go down more than the Money Centers and the Goldman Sachs t. The fact theyre come led now, down 10 each, makes me worried if you stayed across the board and equalled allocations like goldman, youll lose a on your portfolio. I would be coupling these completely. I think they need another 50 down. That wont be the case for Goldman Sachs or some of the money centered banks, but these regionals have been treated as the same quality and major names and theyre not. They have really very risky profiles on their Balance Sheets. If energy stays below 50, lets talk about the junk coming due in the Fourth Quarter of 2018 of which some regionals own a rlot of this stuff. Youre missing the big picture. I dont agree regionals are being treated as though theyre the same quality. I think theyre more levered to the things people were excited about happening. Thats not the same as saying someone saying these are blue chip Money Centers and guess what, a bank in texas that does 80 of its business in texas is a blue chip. I disagree. I think it was more greed than anything else and they fought, this is how i get the most bang for my buck. Let me own the companies most leveraged to tax cuts. Let me jump to brian. Breaking news desk. Something regarding bill brooks. Yeah, i do. In fact, just in, according to my source, bill grosds gross has filed a request to dismiss his lawsuit against pimco. Because they have settled, guys, my sources say that settlement, gross was asking for 200 million is between 75 and 100 million. Bill gross will throw in a couple of 10 million of his own money and that money will go to charity, the sue and bill gross founation. As part of it, sources at pimco will name a founders room at pimcos headquarters after bill gross, so bill, obviously filing that big lout, alleged a lot of different stuff in 2015. Sources telling me the paperwork has been filed to dismiss that because they have reached an amicable settlement, between 75 and 100, a name of a room after bill gross. Bill will kick in more money and it will all go to charity. So looks like the drama between bill and pimco has come to a close. Back to you. Thanks so much. Back to the mat at hand. Real question now is whether this trump rally becomes a prolonged trump slump. Its not. The markets bouncing ae ining todays lows. Guess what, the worst came to pass. Were down. 2 on the s p 500. I bet you by the end of the show. Its green. Sorry, ivb. If it closes where it is now the last three days of market activity. All the signs look great. Like at microsoft, the semiholders, this is not indicative of a market panic because the Health Care Bill didnt go through. Want the thank kevin for jumping on the phone. Go ahead. This is the beginning. Were in the seventh inning. You may get another shot toward it is highs, but then you have to lean into it. The reality is people are dramatically underestimating how difficult this tax reform is going to be and i dont think people understand. This is, theres a process here thats going to make it very difficult to make this deficit neutral. Youre painting the opposite scenario that you were laying out. So respond. Look, there are things they could do to make this incredibly hard. For instance, the border adjustment tax is the worst idea out there. Hopefully, thats a canard they give up. However, just cutting Corporate Tax from 33, 35, down to 28, 25, that is an easy sale. Wheres this money coming from . You know what theyre theyre going to, instead of having it static, theyre going to have it dynamic scoring. Trumps going to say if we cut the tax rate, the economy goes up. If youre not putting a bill to the senate thats definite flute ra neutral, you need 60 votes to get that through. No, you dont. It will be reconciliation. You can only do reconciliation point is, you think its not going to be that easy. The democrats are not going to, not going to jump over and do tax reform. Schoolhouse rook. Everybody is focused on the fallout from the health care failure, what it means for the rest of the agenda. We should also be focused on earnings because the drop in the market comes on the eve of earnings season. Forecasts show a strong pick up for quarterly numbers. Bob pisani, tell us about that story. Good to see you. The bulls are hoping a strong earnings season may provide a martial stabilizer for whats likely to be a rocky debate. Now, look here, earnings for the s p 500 are expected to be up 10. 4 this quarter compared to the same last year. If that holds, it would be the biggest gain in nearly six years since the Third Quarter of 2011. That could change the conversation about an entirely comfortable rally pushing more towards the mund mentals. First, the two biggest sectors, technology and financials are said to deliver earnings gains of roughly 15 apiece. Those are huge numbers and energy stocks, the other key piece here, after two years of declines, theyre expected to e report positive ironings over all, so right now, were in a delicate situation. Be nice for ail to get over 50, but so far, the earnings expectations, very strong for this quarter. Thanks. Then the question becomes whats more important. Tax x in the trump agenda or earnings. People are talking about earnings as much they should. Clearly. In january, we talked about earnings quite a bit and i think that was a catalyst for the market rally. How about the european recovery . How about emerging market, up 12 year to date. Did anyone predict that . I know josh was on the story. How about the nasdaq, the way it has performed. Sometimes, the best trade is no trade at all and i think thats where we are now. Yonk the market is going to fall precipitously. I dont think its going to rally anytime soon. I think were in a sit on your hands then. Because thats the thing to do in trading. Yeah, i understand that, but then tell me what youre going to get back engaged. You have to wait for the market to give you signals. You have to wait for a con fluns of technical indicators and you have to wait for fundamentals. Or one other thing weve not mentioned, which quite frankly, ive been saying i think is the trade of the year. Look at the relative performance of International Stocks versus u. S. And recognize you have other options besides trying to figure out the next 3 of the s p. Vgk turned green early this horng. Eem looks sick right now. Every time that dollar falls off, een gets more money and more flows. There are things making people money right now. Even if the u. S. Rally stahls here. Dollar, rate, oil, your three indicators since november. They remain. Its no coincidence that oil broke down. Market broke down or stalled out with it. Saying as long as as the dollar stays weaker, as long as rates continue to move lower, and as long as oil and as long as the dollar is at 47, as the dollar moves lower and oil does not rally with it, what is that telling you . Dollar lower, oil should be higher. All right. Heres what else is coming up on the halftime report. A day of big calls on apple and snap. Next up, jpmorgans apple watcher and a Rare Television interview. See what hes saying about the trend for the tech giant and 14 analysts initiate coverage on snap with a diverse set of ratings and price targets. Is the american investor about to miss the boat . Before the break, our partners report on big drop days, jpmorgan is up on the punching bag. The stock falls 1. 7 on average when the dow losing between 100 and 200 points. It falls 2. 7 . Global and jpmorgan when the dow falls more than tloo 30 0. When you buy the day after, jpmorgan returns 1. 8 a month later. Cat pill lear jumps, dow returns 30 days after a big sell off. For many, go to cbs. Com pro. More halftime in two minutes. Jooix jo oi at fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. When a fire destroyed everything in our living room. We replaced it all without touching our savings. Yeah, our insurance wont do that. No. You can leave worry behind when liberty stands with you™. Liberty mutual insurance. Were back. Shares up since hitting a low in 2016. Jpmorgan sees more room to run. That firm reiterating apple at overweight. The analyst who made the move is live with us in san francisco. Rod, are you there . Good to see you. Good morning. Im here. Sfl i think its the first time youve been on our program, so welcome. Your note got us talking. You say street expectations for apple are too low. Yeah, we think this cycle has been talked about a lot. But it really still is underappreciated when you look at how the market is forecasting numbers for last year. So we think street numbers are still too low. Our earnings number is 15 ahead of the street con ssensus now f 2018. All built around the iphone. Thats where you think the expectations should be raised. Yeah, thats right. We think that potential for upgrades here is very high. Weve got about 260 Million Units forecast for the next fiscal year. Thats up 17 on the last year theyre going to finish out here in september, so, we believe theres a lot of potential for momentum on that new iphone. Now, it e depends on apple delivering a good product, but we see a lot of evidence there is a good product here. We debate the Services Side of the business all the time. How do you think about that part of apples business and how you look at the whole model . Yeah, i think thats a pretty challenging side of their business. We are not super optimistic in our forecast there. We think theres a lot of potential for apple, but so far, they havent shown themselves able to capitalize on that. That doesnt mean they wont in the future. Theyve got a lot of talented people there, but still a lot of challenges. Its joe. On friday, i was talking with a Trading Group there, mining for strategies looking forward and they mentioned apple. They said we know the fundamental story, we know about the lift, but is this type of name that in a down market, will outperform the s p and in an upmarket, will outperform the s p baseded on its current fundamentals. You agree . I think it ought to outperform given the kind of earnings we see. If you beat earnings by 15 , doesnt matter so much what the markets doing. People are going to take notice of that. I think the stom will outperform. What does for apple . Are you factor iing that in qul when you look at the companys numbers or look where the stock price could go . Not too much, although i would say that the company has a lot of cash offshore. We believe one of the opportunities for the stock to rerate is apple paying a higher dividend over time and of course, having that money onshore gives them the ability to do that. We would see it as a positive for apple. Rod, ian here. Can the stock work just on the services alone . A lot of people have figured out the case here at 140 is services, but if the iphone doesnt work, can the stock work