Why something would come out of the blue that doesnt let us get to 22,000. These big levels, although meansless in the grand scheme of things do tend to acts like a ceiling or magnet and weve blown through a lot of levels recently so, you know, flip a coin if we do it today, tomorrow. But i dont think that that has anything really to do with what the way forward says a lot of the technicians that i talk to are talkingabout augus being seasonally not a great time, its actually the worst month for markets over the last 30 years its in average decline of a little bit less than 1 . But that is the backdrop but that doesnt always hold. The trend is certainly your friend as they say were going to close in on this it r 22,000 milestone. May hit it within the next 59 minutes or so of this program. But what are investor supposed do, is that the sign of Better Things even yet to come or as howard m marks would say, maybe time to reduce the risk. Greenspan talking about a bond bubble even though he says he does not see one in stocks right whether its marks or singer or fink, those are all people and there is a core rugs of others who have said there is a problem out there, things are getting extended and yet six years, its been six years since weve seen earnings like this i mean, so that is what is driving this its obviously not the agenda because the agenda is dead on arrival right now. Its obviously these strong earnings and the fact that people believe that this can continue and will continue. And youve got low Interest Rates, still very, very low inflation, and i think the issue is that there are some people who are levering up to get more exposure here in the market. But most of them are really pros and its probably way out there on the bell shaped kifcurve. I think most are scared to lever up so youre roughunning this b portfolio, tiaa, what do you do as you view this market closing in on this milestone it is really fundamentals that are driving the markets higher they are running 10 growth, that is 4 better than expectations its also sales growth sales is up about 6 not as good as last quarter, but still pretty respectable are you nervous to put money into work . No. Some sectors look expensive, i dont want to Chase Technology here, but i dont mind the fact that financials have actually caught a bid, that energy has sort ever kind of stabilized i think that consumer stap hile will benefit from the weak dollar are you calling the nasdaq expensive . I do think its expensive there are pockets of it. I certainly have some tech exposure, but ive actually been reducing my exposure net net joe, does that make sense to you . You come into august and i think yesterday afternoon talking to a lot of folks on trading desks was okay, we had weakness at the end of the day and a lot of the growth momentum naz todsdaq type names and retu selling pressure you come in this morning and what are we selling . Were selling oil, were selling Energy Related assets. And were not correcting were doing what weve been doing all year which is rotating so okay, out with the oil which has been this favor over the last week or so, financials still strong, getting a little bit of buying interest coming back into the joshs invidia, seeing a bit of a buying interest coming in even to a name like amazon so its a rotation and as long as that exists, i think that suggests continued favorable conditions there are negative diverge e divergenc divergences. Biotechs have been a horse leading the market now you see xbi sitting on 77 support. Now below. If you are a short term trader or someone that looks to the Biotech Sector for sentiment, not great. Transports are another obvious weak spots everyone is talking about sitting on the 200 day could they break below its possible. I think they are down eight of the last 11 days russell weakness so its not like we are in this free for all with every single stock going up every day joe nails it you haveflowing into energy and maybe coming out of biotech. Is this going to be a meaningful rotation . The bigger rotation let me punctuate that the biggest rotation that Everyone Needs to be focusing on and thinking about is that this is no longer an s p rally on its own. You have a major breakout in the international averages, in individual Country Markets throughout europe, in developed asia, period huge regions of the world that have been left in the dust are now outperforming the u. S. Market, breaking out to multiyear and in some case alltime highs and if you are just thinking about the 500 biggest stocks in the United States on their own, you are missing the biggest picture. Lets bring two more market voices into the conversation bob is in princeton for us and david voenburgrosenberg a le cautious guys, welcome. Dave, you wouldnt buy stocks . Not at these valuation levels no matter what benchmark you want to use, the pricing in the stock market far surpassed what earnings are doing in the past century, only 5 time in the past has the u. S. Stock market been as expensive as it is right now and of course valuations are the timing device. But i do believe its a constraints on future returns. So, yeah, im decisively cautious bob, why is he wrong . I think that momentum in earnings, the fundamental improvement in the u. S. , and Global Economy that others have talked about, the mass amount of skepticism out there, the cash on the sidelines earning close to zero, all tells me that while david may be right at some point because valuations are not cheap, in the meantime the drivers are fundamental and pushing us higher. And david, its not like we havent heard this from other very smart market watchers you point out this long memo from howard marks who says id rather be early and out of the game than too late that sounds like what you are saying here, although you must know that stocks could continue to go higher for some time well, there is no such thing as a sure thing, you about one of the earlier comments was how the pros are driving the market higher the question is do the pros driving the market higher, do these pros have a pulse or are they machines or row bottbots we know insiders have been booking profits in their own stock. And the mutual fund data, that there has been net redemptions for ten weeks in a row over 40 billion from household america so the question really is, yeah, who exactly is doing the buying right now. Who in this greater fools theory would be buying stocks outright at thesemuffle levltipe levels we talk incessantly about the u. S. Market. Its 30 of the Global Market cap. I think prudence says book your profits late cycle and move to other areas that are better valuations and Stronger Economic fundamentals i hear about the strong u. S. Economic fundamentals. But we will average a year with gdp growth below 2 . Were heading into an environment where the central bank and u. S. Will be less fr t friendly maybe emerging asia should be the concentration instead of the u. S. Market. This is josh brown. So i agree with part of that and we are overweight International Names relative to u. S. Names and i do think that there are cheaper stocks and more exciting opportunities elsewhere. But i want to go back to what understand earlier xhrks is twha the u. S. Has only been this overvalued twice i think and i guess youre going by cyclically adjusted pe ratio. The problem with that statement is inher rent in the way you phrased it we only have two observations. So i dont view that as scientific to point to those two instances and say both times we had a stock market crash so surely well have another. And then the second thing and i think this is probably obvious but who stating, the average tape ratio for u. S. Stocks is Something Like 16 throughout history. But over the last 25 years, its been elevated above that average 95 of the time. So why are we using that as barometer for even a three year outlook let alone a one year outlook . Well, actually, i didnt mention the two other times which i think jeremy and james have i think you can go there i was just looking at classic forward and trailing pe ratios, good Old Fashioned way that is the most expensive stock market in 16 years and even on that basis, weve only been this expensive in the past 5 of the time i was never by the way calling for a crash or a significant correction it all comes down to the balance of probabilities what are your expected risk address ju adjusted returns so im not talking a doomsday scenario, im talking about how you approach prudent investing and one particular refugee i dont know of trefugee of the wd the scrubbed down operating earnings, youre takingi dont know refugee of the world. The scrubbed down operating earnings, youre taking a look at national. Caller earnings, pretax, after tax, profits peaked in late 2014. They are actually down 5 since that time in dollar billions of terms. And the stock market is up 20 so this view that the earnings situation is great didnt look at the whole gamut of earnings and we just got some data today, ism is still at a pretty good level, Construction Spending down 1. 3 , the flat growth in two of the past three months in real Consumer Spending and yet the people that believe that the u. S. Economic fundamentals are strong, i mean i rub my eyes sometimes and yet the fed is tightening policy and a real squishy growth environment. And with core inflation far below target, what does that set us up for with a 12 month view not 12 day maybe a way to look at that is fundamentals are Strong Enough to maybe keep the fed at two rate hikes this year and to keep inflation from getting out of control and maybe the market is not saying, oh, its so strong, its saying may, good enough, this is what weve gotten used to why not move to the areas of the world, the Central Banks that govern regions. I mentioned emerging asia where real Interest Rates are high and those Central Banks actually have tremendously weight to provide liquidity. Lid qquidity is the tent for th financial markets. Why fixate on the u. S. Its not about the rate hikes or rate hike, its about the fed will start to experiment with this Balance Sheet in the other direction. We know what qe did to the u. S. Stock market for the past number of years what is qt going to do to the market that is a source of uncertainty and risk that does not deserve the multiples in the u. S. We have all right dave, bob, thanks. Are we ignoring some of the risks that are out there you get completely different pictures painted by the two gentlemen just with us. I get it. I get that there are some risks out there. Im not saying everything is perfect. But i have a list of ten names in front of me that i would buy d today. Lets go down the list. Alexion, trades at 19 times forward estimates. Great quarter. At t, kind of a boring name, trading at 12 times forward estimates. Blew it away, stock up 6 . United healthcare, that was a really good quarter. Stock actually sat that day, still has more momentum. Oracle, great number so i get why there is concern kind of on a macro, things are not perfect, but things are not that bad and companies are reporting good earnings and you have to be a stock picker. Well put that whole list on our web page i promise all of you that we will do that one area of the market that may be signaling a warning to investors is as josh said the transports coming off their worst month in a year. Bob pisani is live on the floor of the New York Stock Exchange tracking the numbers and youve been raising the flag on this. I am. And there is a notable diversion occurring. Lets show you what is going on. In july the dow industrials were up 3 , transports down 4 . This is after the transport hit new highs in the middle of the month. I think sectors within transports are having specific problems for example the railroads are down today and for several week on concerns about volume and pricing. The rails also still have significant exposure to energy that is also weighing on them as well so look at the auto sales today. Ford, general motors, xrisl mot reported below expectations. That is not good for the railroads overall. And airlines have had capacity issues and margins are at cyclical highs right now you could always throw in pricing issues you see this little war between united and frontier and other airlines that is an issue truckers and shippers have had lingering concerns about capacity growth, there has been weaker pricing poor state of retail is not helping. Two other issues, the dow transports went up over 15 in less than a month after the election after the november election, the i shares transportation etf saw assets increase almost 60 , everyone piled into the transports that slowed down in april and has been drifting lower ever since. A sign investors are not as bigs on trump play and prices were too high finally the transports are mostly a u. S. Play there has been bigger opportunities overseas and that is why the Global Industrial players, boeing and caterpillars have been should strong. So a lot of reasons why we might be seeing weakness in the transports bob, thanks does this not matter transports have had an awful quarter, a rough august so far but you have em up 5 , s p up 2 so far in the quarter. And you had crude oil rally nearly 6 . So that had an impact on transports so is it a warning signal historically yes, it has been. Do i believe so . Not today. When you listen to the smart guys that we talked about iks and th, and they are nervous about where we are, i think that they are nervous because they cant be as regular investors can. Its too much money to i mean, you know, one of the reasons that when i look at steph, i know the portfolio that they manage, the trillions of dollars that they manage that is tough to be moving in and out of the market. Now, that is why she scales in and all the rest and scales out the same way with that same discipline but i think these guys are nervous because they know that it takes a long time for them to get out of the market. They cant hit a button and be out as much as people want to point to Algorithmic Trading and High Frequency and all the rest. These guys are not hitting that button and i would add its a grade trade, very asymmetric trade to say im cautious, but not actually do anything with your allocation and then caveat the hell out of what youre saying, im not calling the top, not saying this conditions go on for a while, im not saying its not impossible that this time is different. As long as the headline is im cautious or be nervous or whatever you said, ands reason why that has such a great asymmetric risk reward is because if the market continues, that is fine a, youre still long so your clients are happy, still getting paid and b, no one remembers anyway about you if you are right, youre the guy that called your shot i told you be cautious and nobody remembers any of the calf yo kafr y kafr y catch y caveats. Well keep an eye on the dow. Youre about 12 points or so away from 22,000 under armour is under pressure they announced a 2 cut for the Global Workforce the retail analyst with Morgan Stanley is joining us. Jay, good to have you on youve been all over this story for the last many, many months im wondering what you make of todays news and the stock drop that came with it. I think todays news tells us under armour continues to be in a state of transition. They are working on operations, fixing the product, correcting some of the tactical mistakes that they have made. And justment to guidance is the reason that the stock is down, but the bear case is that under armour is a dying brand. We disagree with that and if they can come through this transition period, the stock could eventually start to outperform we are still optimistic that under arremour can right the sh. And why is it weak . Because under armour has been undergoing a fashion transition. Performance apparel was a hot category for a changing and there is a lot of excess inventory. So those factors and obviously the transition to online spending has slowed growth in the wholesale channel where und und under armour is strong but i think it can recover at what point does the stock become attractive . Is there is a number in your head where you put out a 50 pager that it builds a positive case rather than the negative one that you have built on prior occasions . Well, i think what we will look for is signs that the transition is happening. We need signs that they are controlling inventory, their accounts receivable gets under control, that we see new products coming to market that are working, overall inventory levels start to normalize. If we see those things, the call on the stock will be about fundamentalsinfrequenting not so much on price, but con fir nation made it is coming back on its feet and can grow again. Fir nation made it is coming back on its feet and can grow again. Ill let you run, but well talk to you begin soon so what do you do here with yet another significant pullback for this stock also taking into consideration that adidas, a stock that you have talked about on numerous occasions just recently raised their outlook, people seem to be more positive on nike as well about. Yeah, adidas still just hitting the ball hard. And unfortunately, under armour is just as jay said still too focused on just the performance side i know as a consumer, that is what i go for when i go to the under armour site. Im not going through to look at shoes. Just the performance wear. And i needless and less of it because most of us bought it and you see an awful lot of it in discounts stores so thats what i worry about with an thur arrest mounder armr if the share holder brace wasnt so in love with jeff plank as a person and this was another ceo, would people be talking about replacing management the problem is i know hes a cult guy. They might, but the problem with the stock is that its traded 41 times earnings the investment cycle is not changing they have to continue to invest less in performance and more in lifestyle. And i think nike is way ahead of the game and adidas even more. So its hard to get around that even though i do thinked a damage plank is a good leader. I just think it will take some time even jay said it could be a tumor quarters, two, three more quarters to right the ship here is what else is coming u