Bit of a bounce. Not much. Were not going down. Trend aint your friend. Its been a downside. Look, target, it was. Reporter 225. Right. So i mean, that obviously isnt good for the banks. I think the fundamental story still stands strong for many of the banks, but obviously, this is one of the pieces that theyd like to they would love if this thing started to move and we had a 26. I dont know that were going to see it, scott, but theyll survive and theyll do just fine even in the environment right now. Yeah, if you look, joe, in the pags month, venture down 5 . They are. How does the trend reverse if rates continue go down . As some suggest if that trend continues, the whole market is going to fall part. I respectfully disagree been its more how does it go back. Lets talk about bank of america. 17 in november, 25, 50 at its high point, somewhere around there, 23. 50 today. Folks are talking about the move in bank of america being over. The financials are trading at the upper end they downgraded it and say theres not much left to play for. Well theyre wrong. Theres a lot to play for. Meryl lynch monetizing, there is an improving consumer whos spending. And i think the overall environment for financials are what is the next catalyst to advance it from the consolidation range that its in right now . If you dont think rates are going to rebound from where they are now, why would you buy a bank stock . A lot of reasons actually. Youre right. Youre making my point. Deals, deals, deals. First and foremost, you do to want respect the bond market. Absolutely, no doubt about it. Thats number one. After i lot to say, hold on. The bottom market obviously yields are disappointing. I think its reflecting that we are seeing slower First Quarter gdp. We have apprehension about washington for sure. Europe, we have these rates we have the elections. Clearly rates are very volatile. I dont want to see it goat 225, banks are not going to outperform, however, it could take longer term horizon. Earnings to be good. The economy to pick up from here, led by some manufacturing, consumer, i still think the Balance Sheets are strong. Capital levels are strong. Across the board in the market. Loan growth is weak. I expect that to pick up. I think youre also going to see if the fed does raise rates, better anymores, better Net Interest Income and you can see jim kraim we are us yesterday. Heres what jim told us what he needs to see for banks to start working again. We need to see a decent, strong march. We unemployment number. Its got to be really good. We have to keep the two. It allows to continue on the banks ian if we get 2. 3 flat on the ten year. But if question lose the two thesis. I will be wrong on my liking of the banks. I like the banks. You know i like the banks. And i like it for all the reasons, stephanie im with you, all the reasons you said in addition to the deals that are going on. I mean, youre seeing record issuings of Investment Grade debt right now. First quarter, we havent seen volumes like that. Whos leading the pack . Jpmorgan, b of v and city. You look at bma transactions and the ipo market. I got youl of a that. Listen to what kramer said. If you dont get a rise in rates, if you dont have strong employment which keeps the fed on the path to a minimum two of rate hikes who said were not going to have that . Scott, employment numbers have to be strong. We know, okay, im not talking about three rate hikes this year. I know some are, but two is a reasonable number. I dont care about auto, im sorry monday morning, but ultimately, Everything Else is saying were in an economy thats moving in the right direction. And that leads us to rate hikes. Real question is whether the bond market is tell us something that the stock market is not. And help us answer that question. We go up to chicago and our rick san telely. A lot of folks scratching their heads if this continued to move lower in rates even as signs continue to appear that the economy is improving. Confidence both business and consumers off the charts. No, i agree on the confidence thing. Confidence is high. And i think that has a lot of positive associated with it, but gdp isnt one of them. Its going to be many quarters even if everything goes perfect before you see that. I look at it a little bit different. Lets got board quick, judge. I continue to see the most important level. There was two levels. 227 where we settled the last day on the 1231 of 15. It took us basically the entire year just about to overtake it. And whats interesting is, we overtook on 1117 we started our consolidation. But this move from november 4th to november 14th, and that was a friday, so only six trading days, we covered 50 basis points. So theres two things. Growth just is slow to change. And were still at a lofty level reflecting growth. Were only down ten basis points on the year, but i do think if you start to trend below that 227, some call it 225, whos going to ever argue with jeff . Look at his record. But if we do, then id say youd go to consolidation. You tend to go back and fill in the thin areas. Those six trading days could be defined by 187 and two in a quarter. Im not that negative yet, but youre all right. The cumulative effects if you should get in that range will draw down stocks which i think are higher, not because of trump, because of hillary. Just my opinion. Yeah. Rick, thank you. To ricks point, history is not on the bulls side. If rates continue to drop the way they have. Our dom chu here with that story. Scott, to further that conversation you guys just had about whether financials do well, take a look at this because we asked our data partners over at kensho to crunch the numbers, over the last decade, again, since back in 2007, we asked what happens when rates drop . By 30 basis points, kind of like what were seeing now, 30 basis points in the span of one month. Its happened about 35 times in that span. The reaction of the stock markets pretty marked. The s p 500 broadly down almost 3 . Its only been a positive trade 23 of the time. So yes, three quarters at a time, its a negative trade over the past ten years. Financials, taking the worst of the heat here down by about 6 on average, materials and industrials also in that mix as well. So some of the more cyclical sectors, and you can see here, the trade Positive Side of things, they dont happen very often. So as we talk about whps when rates drop, financials part of a focus here. Materials and industrials also scott sectors to watch. Thanks. Prefed. Goes down 30 basis points. Yeah. What doms telling us, if it continues to go down and gets close to two, youve got a chance of a 3 pullback in the s p 500 as a result of that. Yeah. I dont think thats going to happen. I dont think dom thinks its going to happen or anybody here on the desk really thinks thats going to happen, but, just as jeff said, jeff of course, said, jeffrey, sorry, jeff, jeffrey. Get to the point. What weve got here, what weve got here, judge, is a situation where you cannot dismiss the anchor that europe is to these rates. You cannot do that. We said it time and time again here on the desk. People decried it. That means they were dead wrong. Whos right . Jeff is right. Im right. Were going to go back down to around this level and if Courtney Gibson is right and we see two rate hikes this year, we could still be right where we are. Thats not a negative. And take a look at the s p, were up 5 year to date, right . Xlk, the tech index up 10 . So the fact that the banks are up 2 year to date as measured by the xl because tech doesnt care what the feds going to do tomorrow. Right. And i dont care. What trumps going to do tomorrow. And i dont care. I care what im benchmarked to the s p 500, scott, with the money we manage. And so, i care about the s p. Are we beating it . Yes, so thats the part that i care about. Do i care about one little sector, the Banking Sector and do i think that the rates are going back down to two or under two . No, i dont. Just saying, its not just a little sector. Its the train that everybody is on. Its not here is it, look at what dragged us here. 5 on the year. Theyve given us 2 . Thats where the juice is, judge. And you want to stay with whats working then. Yes. The point that docs making. And to courtneys point. I mentioned this last week, youre seeing a significant a. Supply come on the market on the debt side of financial juices. And this isnt about the fundamentals of financial institutions. This is about capital flows. This is about europe. This is about a ten year in germany thats 31 basis points. Thats why the u. S. Tenure is trading where it is. And if it trades 225, 235, that might be good enough for the fundamentals and the Financial Sector to come through the s p has continued to rally in an environment where ten year yields have been low. They can continue to do so. So i dont think its a harbinger of something very ominous unless you see some geopolitical shock that takes rates well below where it was in november. And thats what this year has been all about. Its been rotation. Right . I mean weve talked about this. In january, it was the sickly kl trade, february, defensive trade, march, it was more of the tech trade. So i think, you know, even though rates come down, it doesnt necessarily mean that we have this massive collapse in the market if you can continue to have rotation and i think earnings are going to support that going forward. We have one week to go and were going to be focussing on fundamentals. Arent those trades that you just mentioned though so tied to how people view the progression of the trump agenda . Okay. Yeah. Trillion dollar infrastructure, trillion dollar infrastructure, all these stocks are going up. Im not sure, now start things, maybe everythings going to be pushed off more and those trades you thought would work dont work. You said from the beginning of the year, even right after the election, judge, we said, youre not going to get tax reform until the late second half of 2017. Might even be into 2018, but i mean you know that ive said this time and time again here, i dont know that anybody sells on the other side of that. I think theyre on the same side. So if you are looking at that, theres not a single day this year that technology hasnt been ahead of any of those other sectors of the s p 500. Tech from day one all the way to now, up 10 , you look at the chart overlay one versus the other, tech is just outperforming, outperforming, and thats just fine. That drives us higher. Even if banks flutter around right now as they have. Theyre up 2 year to date, thats just fine. The point here though is, i dont hear a good part of this desk ready to give up on the banks i wouldnt give up on trade. I dont see the rates going down. More in the banks. Rates stay here the banks arent going to do anything bull, bull. If we the banks are here because some out there fear what they think might happen even though they were dead wrong when the rates were at 260, they were dead wrong thinking theyre going to three, now, theyre scared when theyre at 235, that sounds like buying high and selling low. Ill tell you, my desk, my treasury desk, i called them right before we came on today. They said that the market right now thinks the street is short. And whenever you see that, you start to see those rates begin to go down. This has nothing to do, and this is the bond desk, we have 50 bond guys sit right here in new york city, they are not even at the same point that were talking about today with oh my god is the stock market about to collapse. Its theres some other things going on behind the scenes that are causing these rates to go where they are. Look at the movement in the market. Lets say in the first and eric, one of the reporters helped put this together. In the first 50 days of trump, since the election, since election day, until january 20th, financials up 16 in the second 50. Now theyre only up three cents. Industrials up nine, only up two cents. Tech was up five, its up eight in the second 50 days of trump. Only up two. People think its going to be a negative sector at least for the beginning. The last 50, its up six. And the whole point of rotation. This is where youre seeing the market rotates. As data points come in, and people get more cautious, people take some profits, pick some money off the tanl and put it into laggards. Aye been doing that with energy. The best values in the market where no one wants to go that the point. And its not trump or not trump. Its like valuation and fundamentals. Repatriation is real, big pharma has the second most a. Overseas cash that it can return, thats why health care is performing well. Technology was vilified in november as the Trump Administration came in, everyone thought, oh technologys going to have a huge problem. We are going to have protectionism. That doesnt appear to be evident. What shines through is again 400 million of cash on their Balance Sheets and going back to financials for one second, i got into financials the latest of anyone on this desk. I got into financials in november. Everyone else has been in financials. I dont think any of these four people here were buying financials because they were making a call on where rates were going. And i think youre making a mistake i think that was part of the equation without question. Its a very, very small part. The facts and the fundamentals. Ill keep hitting on that because we go back to last quarter, wait until we hear from jamie diamond on april 13th, well have more facts after a record quarter this past quarter when nobody thought well the banks, theyre not able to do this, that, lone growth and jamie diamond and the rest of the banks for the most part came through. By the way on the city downgrade of bank of america today, we were talking about this beforehand. The analyst unfortunately has not been very accurate going into this, scott. And thats what we always say is follow the analysts that give you the answers. And the ones who give you the right answers, those are the ones you follow. Katie hew bettery for instance and apple, mark mahany and amazon, pick your stock and your analyst. The rest of them, let them talk. Bank of america was the cheapest bank stock as of the day of the election and traded at a very wide discount to jpmorgan. Yep. Since the election, bank has outperformed and has substantially closed the gap with jpmorgan. And thats the key thing. Theyve closed the gap. Doesnt mean theyve caught all the way up, right . They have closed the gap because of that outperformance of the stock itself. Thats a company that when you look at them with the meryl arm and Everything Else, bank of americas got a lot of different levers that they can pull to make a lot of money. Particularly on costs. I think thats a really big point to make on bank of america. They had a very bloetd infrastructure within the company and they are slowly taking that down piecemeal and that could be a nice catalyst if you have margins actually going higher, little bit better revenue, youre going to get positive operating. No doubt it has rallied a lot, but i dont think you get off here for a point or two. The point were making is if rates are not going to cooperate, you better get the earnings. Yep. 100 . And all in the banks are talking about that. And you made a really good point about the consolidation, if you look at whats happening with all of these large banks, theyre making more money with what . Less people. Theyre leveraging what . Technology to get to the same end and their returns are looking phenomenal. So rates aside, theyre making fundamental Business Decisions that are changing how theyre performing in the marketplace. Rates, rates will be icing on the cake, scott, i wish had a cup cake, id be the icing on the cake. All right. Were going to continue this conversation tomorrow with one of the brightest minds in the investing industry. Leon is the founder of omega advisors. Hes going to join us to discuss the markets, what he sees in the months ahead. Tomorrow noon eastern right here on the Halftime Report on cnbc. Heres what else coming up on the half. After a stunning run, the wall street analysts are starting to turn on them. Are they right . Is it time to cash out . Or are they wrong . And do you need to stay in the trade and buy more . Plus, a big day, a big cause across the board. Amazon sales force, alphabet, exxonmobile, well hit them all in the blitz. When the Halftime Report with scott wapner and the traders continues in two minutes. Various shouting heigh ho its off to work we go woman on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. And each job created by the Energy Industry supports two others in the community. Altogether, the industry supports over 9 million jobs nationwide. These are jobs that natural gas is helping make happen, all while reducing americas emissions. Energy lives here. All while reducing americas emissions. Im ricardo, a sales and Service Consultant here at the xfinity store in bellevue, washington. Here at the store, we offer internet, tv, phone, customer service, home security. Every situation is a little different. It could be about billing, simple questions like changing the phone number. Sometimes, they want to upgrade, downgrade, but at the end of the day, you want to take care of the customer. One of the great things about comcast, theres always room to move up. Of course, it depends on you, how hard you work. Welcome back to the Halftime Report, shares under pressure today, downgrading that stock to underweight. They say demand for the companys graphic card has gone from bad to worse. Its our call of the day on what has pete ben a home run stock. Home run stock. You know, its been sort of trapped now for a little while, scott, seems like the 95 to call it 110. Big range, but when you look within the note itself, i think the part about it is very interesting, talk about margin compression, they talk about the competition out there with the graphics and all. I think the most interesting part of this note was when they moved on to some of the other stocks, scott, and they were talking about sky works and serious logic and how bullish they are on those. Sky works has been working and that was the name we all saw back in january before apple. It was sky works that crushed their earnings numbers. Revenue was up 9 . They did everything they needed to do, and that fed you all the info you needed into apple. Youre not going to fall somebody for downgrading after the ridiculous run yeah whereby you do. If you think theres room to run. You do . Absolutely. Absolutely. We move name in the semimyspace when she launched late last year. We have 120 price target on this name right now. And she is incredibly confident. We w