Of ways to describe this incredible rally. Its incredible, and its a little scary, but you cant be scared, and, know, you cant wait for a pullback because market timing is so difficult to do and very few can do it right. Its okay to get in here . I actually added some positions it a i had. Which ones . I added to delta which i bought earlier in the week and bought back united which i sold at 68. Right. Dont real like the company but the momentum in the transports and the airlines in particular are so strong where there hasnt been any for years, thats not going to quit right now and one of the cheapest sectors used by the market i also bought some kbr, part of the Engineering Construction theme and whether we get the structure or not, the economy is so robust and im trying to use some of the others well, eme is one, but the volume is so light that its difficult to get a position in it, but they are more domestically focused and also leveraged like kpr to energy, and i still think you can get in kb rrks for example, is expensive this year because of the growth and the pe is cut more than half i think you buy absolutely at least for the First Quarter two quarters and the market keeps going. Josh, want to take another stop at it, another 200plus points for the dow. Yeah, look, this is the question that that has been asked over and over again. We run a tactical model thats rulebased its been long since the end of 2014 fully invested u. S. Equities and because its rulesbased the answer to that question has been a relatively easy. Now it gets harder for tactical people and forget about longterm investing. Just from the sense of is this the dumbest thing that i could possibly do is abandon all sense of proprietary and just said im 80 long, whatever just to throw the things out the window heres my answer to that what you should have on your screen in front of you have is whatever chart youre looking at and then in the bottom pane you should be looking at rsi people usethe strength overbought that dont understand technicals and just like using it as a script inadjective, a technical term that signals how much momentum there is in a stock price and when you buy rsis north of 70, what you are essentially saying i know the momentum is as high as its been in a long time but i just dont care its a good approach take a look at some of the favorites right now. Netflix has an rsi of 78 and amazon almost off the charts, 82, ridiculous the qs are 76. The s p 500 is an rsi over 80. Historically from a shorter term basis you are not rewarded for buying 80 relative strengths in these names, so you do not have to rush in today just because youre not as long as you felt like you should have been. Unless you feel, erin, that youll be 300, 400 points higher than where we are today. Yeah, you have to lock at whats underpinning this real. Its being underpinned by strong economic growth, very easy financial conditions, real rates which have actually decreased since the tax bill was passed in middecember, and youre still having very Credit Conditions leading to a robust outlook plus earnings upgrades hitting on the back of tax reform which we saw and were starting to see in the First Quarter Fourth Quarter Earnings Results the other interesting fact to keep in mind is that when you look at last years performance, Retail Community did not participate in that real there were actually not net inflows into u. S. Equities into domestic equity purchases last year so thats also the Retail Community has been behind the curve and missed this rally so thats a pocket where you could see more allocation. Im glad you went there its perfect to the note that i have in my hand from bank of america and Merrill Lynch, their flow show where they say they are at maximum bullish, tremendous amount of inflows, may have been skittish last year, but now people are piling into the market in ways we havent seen in a market is this a good or a worrisome sign firstly, a lot of the inflows there were inflows into equity last year, but they were into not into domestic equities, they were into International Equities and a lot of flows you have seen this year, its been a little bit more split, but you continue to see inflows into International Equities as well the u. S. Domestic equity market has been was left, you know, without inflows last year and when you look at the last seven to ten years the Retail Community has not been actively investing. Still not at peak levels for Equity Ownership from the Retail Community than we have been in the past in addition to that from the flow show perspective, you also have 1. 7 trillionch cash sitting on corporate Balance Sheets which they will start deploying into the market as well in the form of buybacks on top of that repatriation flow so you have a big pull of capital thats yet to be empowered by the equities. Jimmy, weve had one down day since the beginning of the year . There was your pullback on wednesday. And that was mostly i think because of rates, right . Rates moved had a little bit and people got a little skittish for a moment and started buying again once they real iced if youre at 2. 56 today, rates havent budged all that much since that movement the same note asks the question what level was bond yields would cause equity markets to fall yeah. So we had this discussion on wednesday and i toiled and i still say 3 plus meaning youre far away from it the rate issue is not an issue for knee at all right now and i would encourage you, our viewers to not worry about that right now. Lets get to 3 . The bigger questions, should you be fearing this real and waiting for a pullback, absolutely not you can find stocks out there that are attractively priced everybody get a couple of metrix and fashions that they use to pick stocks. There are stocks out there that are high quality stocks that are down 15 or so in their eyes and think about the chip sector and cyclicals. Today, scott, by the way, i found one that ive loved that ive known for a long time, greenbrier companies, last week i sold tripity, another rail car manufacturer guess what that one was selling at twice the multiple that greenbrier is. This is the kind of cyclical you want if the economy is going to expand at 3 my point being there are plenty of stocks to buy out there at attractive prices. Stop fearing this rally. Let me address that question though its not had a level of rates. Its not a number. I wish it were, and then we could all become trillion airs thats actually not going to be helpful to pick a number and say thats where it hurts stocks. Youre going to say its the speed in which we get to that number. Im not, but thats true. What im going to say its the conditions that surround whatever number and right now we had bullard come out yesterday saying that conditions right now are easier than when the fed started to lower started to raise rate to begin with, which means that own though they have done a few fed funds overnight rate hikes, conditions have actually gotten easier and why probably a little bit of deregulation and probably a little bit of speed with which the economy has grown and probably the Global Nature of the recovery so if were getting easier in financial conditions, then were not even focused on when well raise rates. So weve generally agreed that tax reform wasnt nearly in the market as as some people were suggesting is clear we dont even know in its fully into the market yet. I mean, the market keeps going up what is euphoria going to look like when will we a parabolic move. Its a parabolic move. You look at the sglomt what have we had. With all due respect it is. You thinkits a parabolic bove geometically. Punch up a chart of xlf. Youre looking at a linear scale, not a log rhythm scale. A, dont point at me, b, charts look like the Empire State Building right now. On a linear scale look at a logarithmic scale. Please stop. 700 points is not what 700 points was three years ago. I dont care. Lol. Not lol you know to look at a logarithmic scale. Ill show you 25 megacap stocks that have Empire State Building charts right this minute. And ill show you stocks that are down 15 and are Great Companies to own. Retailers. How is your day going, erin in. Thank you i think to measure a parabolic move and peak euphoria, ill be convinced were at peak euphoria when the Retail Community is involved in this and invested in this market, when corporates have erin, aai survey this week. Thats a useless survey. Its only not useless at extremes its at a level we have not seen. Its a small sampling of investors who dont even invest, retirees put we start thinking that this gotten a little bit out of hand. After the fact. Right now youve got financial and Economic Conditions that are conducive to the market going higher. Youve got a pe on the s p which is nowhere near euphoric levels. Youll see euphoric on nasdaq in 99. Youve got conditions. You can make the argument that the market hasnt caught up with the Economic Conditions globally and as josh just said and ill disagree, i dont think money is easier now generally its easier for certain companies. The fed thinks so. Some on the fed dont youre quoting bullard, right, others dont. Were not even sure how good the economy can be yet. Youre not, and you still have a lot of skepticism out there. Howard marks coming on a month, month and a half ago talking about how, you know, the market is going to correct. Ill see your marks and ill show you a buffet and tepper. Exactly, and im going with buffet and tepper and larry fink who not that long ago is very bullish now, not that long ago he was bearish. You can go with buffet and tepper and thats fine and i dont dispute that these are people that should be listened to David Teppers strategy is not to be out of the market even in a downturn hold on, hold on. Warren buffett isnt either. Hold on youre 1,000 wrong on david tepper you are 1,000 wrong on tepper im intimately familiar with the strategy david could be net short the market. Warren buffett has over 100 billion in cash, the biggest stockpile hes ever had. Is that a raging sghul. Wraarren buffett has come out and said. They are not guys necessarily overfocused on calling the top of the market, neither one of them. Thats not true just not true. Bank of america, and Merrill Lynch i spoke to dave last night. Can we go to scott . They raised the question of, okay, what level of bonds will cause stocks to get a little upset . They say the better question is what level in the s p causes the fed to hike by 50 bits is the fed the unknown risk to this story will they hike faster than people think, more than people think or more times . Firstly i think the fed is not going to respond to a level on the s p 500, and i think that so at what level on inflation causes the fed to hike 50 basis points faster than what is priced in the market and has nothing to do with the level of the s p 500. They can talk and, you know, high pott size around financial conditions and instability and bubbles percolating in the market due to s p 500 reaching extreme levels, but ultimately thats not how they drive their decision make at fed its going to be based on inflation. Right now when we look at inflation measures they are not accelerating at the pace you are seeing a tickup. Youre seeing a slight tickup and the numbers this morning. We saw them above two on most measures. Consumption and expenditure which will lag cpi and will not include the real volatility in oil. So the question is going to be as we return to the middle of the year we pass the oneto imdowngrade that we saw from wireless onetime downgrade that we saw from wireless, as Energy Starts to tick up higher, were seeing vehicle prize look like they are stabilizing, and were seeing rental income lock like its stabilizing as well so some of the drags to to 17 are now starting and we turned into the middle part of the year. Does inflation really start to pick up above the 2 on core ive haired say weiss said he bought new thing, jimmy did the would you put fresh money in in the market . Yes. We have we have been bullish equities were very bullish International Equities last year weve started allocating more into u. S. Equities this year we were long and were getting longer, but whats interesting is we are starting to rotate more into those cyclicals which had underperformed until, you know, the Third Quarter of last year and it started to uth perform now. Thats where i think the value is. I want to add one important corollary, tactical. This is tactical weve been talking about strategy for a while you said steve bought some things and i bought some things. I know, scott, exactly what i want to sell when the market turns, but im not selling anything until i see that turn theres absolutely no reason to. This market every day, were joking about it and its a joke. On wednesday you had your pullback the s p was down ten basis points at the end of the day thats it. Im not fighting thissy, but when it turns and you get a couple, three days down in a row, i know where my overpriced stocks are you asinvestors out there watching should know what you want to sell when that time comes. Its so difficult to make that decision because its when its happening of course its difficult. Thats why professionals like us do it. People arent quite at tactical and individuals arent as savvy as particular investors. You have your Investment Managers do it for you, period of, stop. Make it up as your feelings dictate and the secretary is to decide in advance as jim is talking about and to say this is what im going to do if and when that doesnt happen, this is what ill do instead, and thats probably a better approach for most people, but it requires a lot of work to actually follow through on what you decide. And i think thats a terrible approach. I think youve got to be very stock specific in general, overall in the portfolio, and price targets when you go into that sure youve got to adjust as conditions dictate but to say im going to sell the market and the stocks that are overvalued when the market reaches euphoria is kind of ludicrous sell them when they are overvalued. Talk about facebook on pace for its worst day since september under pressure after Ceo Mark Zuckerberg announced an overhaul to the news feed in a will prioritize posts from friends and family dee clemente covers the stock and joins us from new york and also on the phone is ross gerber, president and cofounder of kawasaki and a facebook shareholder. Anthony, ill go to you first because your note suggests that investors should take a look at what happened today and buy the stock on the dip why . I mean, when facebook goes through these period of dips, its typically a good time to buy the stock. I think i liken what zuckerberg and facebook are doing taking your medicine or going to the gym but in order to make the process and system more healthy they are better in the longer term. The real losers here are publishers so public pages what facebook is saying is they want people to connect with people so what i who call like nonpeople who are basically forwarding out or posting out an article that shows up in your organic content, thats the kind of quote, unquote, healthy interaction that facebook is is trying to cleanse out of the system we can talk more about it. The problem is that hes saying time spent is going to go down, and and, you know, i think that i think hover the long term what hes doing is kind of keying off maybe some of the obama and regulatory comments about whats healthy about social media and whats unhealthy. I think facebook is doing this from a position of strength. The research checks that weve done on a pry pry try base, talk about how ad pricing remains low, i would be a lot more concerned here if it were advertisers and marketers saying that they are not getting the roi on their ad. Thats not what is happening. Ross, is this a point of strength, or is this is this a point of facebook making a move because they are so firmly on the defensive yeah. I think this is great news actually mark has not been focused on the product for it seems like at least a year, and we have found great engagement from our ad platform action on facebook and instagram, so we dont really see that as an issue what we do see as an issue is russia manipulation of our news feeds, negative news every day about donald trump and everybody fighting about it and i think facebook has been very smart here because what we really want is social media, not fighting media. Anthony, im trying to figure out how this is not a gamechanger i mean, if the top line is definitely going to take a hit now, we can argue over about the duration of that if its simply a nearterm thing or a long irterm story. I mean, i think that its possible that that i mean, the impact to revenue is unclear. I think the roi for the marketers who are placing paid ads is still quite high, so i guess what im saying is this is not necessarily about the paid ads. This is about the organic content that shows up in your feed. Thats right. And if what zuckerberg is pushing that content to the bottom of my news food facebook has become annoying to a lot of people. No question about it you talk to people they dont want the politicized content and if they make it a better optimistic you can call this optimistic or rosecolored facebook can be cleansed and fixed and that can actually be good for time spent in the long term its taking your lumps now, going to the gym now and helping users in the long term so i dont agree that that necessarily means that revenue is going to be bad for this quarter. I agree with that, too. I think hes dead right. I think this helps facebook. I think the revenue is soaring, and i heard a rumor Cheryl Sandberg was bragging she thinks facebook will be bigger than apple. I think these are very smart moves. The other thing here its not new, guys. Something that facebook has been working on for some time if you just go to their blowing page you can see posts that are relevant, you know, to this in terms of publishers getting pushed to bottom and this is managed dissatisfaction visavis the publishers, people like a news feed or somebody who is trying to post like an article or not a person, right, so someone who is maybe trying to spark conversation with engagement bait or, hey, like, youre a capricorn, so if our a capricorn click on this and thats engagement hand that increases the ranking. What zuckerberg issaying time spent can go down. By the way, engagement we already know has been flat time spent on facebook proper has been plateauing and im modeling a slight decline in facebook engagement. It doesnt mean that price is not cheap, doesnt mean that instagram isnt crushing it, which is it and the shift to more premium content, not necessaryly, you know, newsrelated political content but Higher Quality and Facebook Watch and video content is not going to be okay for facebook so i dont agree that revenue will take a hit. Ross, appreciate your time. And the any, before i let you run, and, of course, i appreciate you coming on with us as well. I wanted to throw something out there quick. Sure. This is the best news for twitter weve heard in a long time, and my friend rich just upgraded the stock i mean, this is great news for twitter. Well get some opinion on that on the desk as well appreciate it. Have a good long weekend. Anthony quickly, amazon above 1,300 today. Youve got an outperform and a target of 1,350 i see. Yeah. The thing about amazon thats striking to me, i was at ces, the voicesearch business as driven by alexa home assistance will be much bigger than people are expecting. We think its possible that amazon is selling key words right now, hey, alexa, i need toothpaste and alexa comes back with a result that recommends a commercial outcome, right, so to the extent that that starts to take off, amazon is in a pull program. In the programattic world, they are getting greater install base and integration with developers and third parties and that driving amazon voice search advertising business starting like right away here in the First Quarter of the year. Good stuff. Anthony, thanks again. See you soon. Anthony di clemente. A pretty good debate going on the street today, talked to big names in the world of technology, neither of whom i can say who they were. Their views are opposite one tells me what you heard from anthony hand in some cases ross. Acknowledgement that the that facebook is straight from its core, this gets them back to their roots. Near term negative and ultimately a longterm positive. Others say its bad for revenues and usage. This is a bad spot its been downgraded saying theres too much uncertainty over the economic impact. This in my opinion is great leadership this is what you want in a longterm visionary leader is thinking about whats going to make the product better one, two, three, five years from now. Not whats going to hurt revenues over the next one or two quarters this is great leadership this is what i look for in companies tea leadership. On a shortterm basis. You only stock . Yes i didnt buy anymore no sense jumping in. They have a quarter coming up. The momentum of the quarter has been phenomenal. If im zuckerberg im going to come out with an announcement thats going to be controversial, perceived as negative obviously by the market and blow away expectations when i report the quarter so i think thats a strategy hes using, dont know so Many Companies do that lower guidance and surprise to the upside and lower guidance. He doesnt want to dilute the goodwill that will come out of the quarter with this announcement then. Otherwise why not hold it for two weeks . Josh . I think facebook will be fine i agree with what jim and steve just said. The company has to be thinking in terms of more than just what does this do to ad sales, you know, in 2018 . And if they dont do that, then people are going to leave the app or stop using it as much and then youve got way bigger problems than had a shortterm revenue hit so i totally agree with that, but were talking about the wrong stock because twitter which was up 50 last year, nobody had a single nice thing to say about jack. Square was up, i dont know, 200 at the same time. Twitter is the stock right now this is a name that is now above an upward slope in 200day moving average for the first time in like three years its breaking above recent resistance 24 and change was recent resistance and now its at 25. Not a lot of natural sellers in the stock. Down and out for so long, and i think that twitters outperformance, not just in facebook but in general can continue so long as that trend remains intact the buyers are coming in exactly where they are supposed to, forming a really nice uptrend, and its been so long since weve been able to talk about this stock and the word uptrend in the same sentence. Yeah. Definitely has been. One month, up nearly 18 for shares of twitter as facebook falls back a little bit back to earth. Heres what else is coming up on the Halftime Report. Two analysts saying enough is enough for this bigname retailer they are upgrading the stock the call of the day is next. Plus, banking analyst mike mayo is with us live as the financials start releasing Earnings Results. Before the break, how the indices do at q4 earnings start creeping in. Since 2010, our data partners at kensho show the nasdaq is the place to be when sold one month after the start of earnings season the Halftime Report with scott wapner and the traders is back in two minutes take a look at shares of coles today jpmorgan up graded the stock today. The stock is up 4 hes got a 72 price target. Its our call of the day retail has been on fire lately. Yes. All you have to do is throw a dart at it i dont think it can last. What a difference a tax cut makes. I think it will last for some, but, still, they have the problems they sell before. I dont think those are over stores are coming out of the market which jimmy likes so you are low on capacity, and theres something that will come back. Nike comes back. U. S. Sales are still sluggish. Thats part of the kohls upgrade so i think theres some rules there and if youre selective like the lulus of the world that has moats around them. The xrt, is this a buy. Im with you on that, the whole sector, they pay an average tax rate of 31 prior to what happened. Its the highest Industry Group within the whole market so, of course, they should get a big bounce and you couple that with pitch black sentiment and huge short positions in all these names so you have this massive look at kohls, 40 to 65 like in two weeks so so youve got that ofin the end for of the challenges, the real challenges beyond what the tax rates are Going Forward have been alleviated and none of the companies have come out with anything they have got a solution in place and they can definitely work and they have to be very selective here. This seems to be a thing of timing for me. You have the momentum of the Holiday Season. It all happened at once. Seasonally youre good. Theholiday shopping season was pretty good and then you get a tax cut before the end of the year for the extra little gusto on this trade. Im not going to selfdeprecate too much. I know about being early to the retail trade. Its done well. Were not going to talk about jv penny. Lets throw it out. Stop, stop. You went there. You open the door. Look, i know something i know something about being early to the retail stock. Youre early to the retail trade on this. Kohls is a fine store youll be around and you still have too many stores and to the point that josh and steve are making to the tax cuts, this is an industry in which any gains from tax cuts are going to be competed away from just this ferocious competition to see who survives you still have too many stores too much competition now, the question is when will it not be too early . Look, get past the february reports in those names late february is when these guys report see who really made money in the Fourth Quarter we know that revenues went up, but we dont know. Let me ask you a question. Throw up the kohls chart again. Did i see Something Like 50 in a month. Matt boss, great analyst, had a 51 price target so hes saying either i get off the train or i upgrade the stock, find the upgrade, thats not a very aggressive target relative to are with the stock is. Youre not going to fault anybody for getting off the train. Not at all, but thats the decision hes facing. Look where interest game from though. Some of the Retail Stocks that have run maybe not as strong as this one. First of all, it was 72 years ago, but second of all my question to you is if you saw a retailer take this benefit from a good Holiday Season and the tax cut and Start Talking about return of capital to shareholders, wouldnt you run the other way . Why no, no, no, no, wait. They should be investing. Ins a great question. Dont give me a dividend. No, no, youre right, okay, but when youre talking about returning capital theres a couple of things some of these guys need to return capital not to the equity holders, to the debt holders if they are going to survive. Oh, of course im not talking about that. Im talking about buybacks and dividends, skip it. Youre also right, listen, no question, anybody who doesnt have the Online Presence to order online and pick up same day sales, thats where youre going with this. Youre absolutely right. That has to be thats a man try, not an optional. Lets jump over to sue herera for latest headlines. Heres whats happening at this hour. At an interfaith Martin Luther king breakfast president durbin said President Trump used hateful words and is heartbroken. As senator graham made his presentation, the president interrupted him several times in the questions and in the course of his comments said things which were hatefilled, vile and racist the u. S. Ambassador to panama john feely has resigned telling the state department he no longer feels able to serve President Trump. The it appears that his resignation came before the president s controversial comments yesterday feely is a career diplomat and a former marine Corps Helicopter pilot. Italian police recovering more than 200 18th century nativity scene figures stolen from chamber of commerce and private homes across southern italy. Some of them are estimated to be worth more than 2 million apiece that is the news update this hour scotty, ill send it back to you. Next up, john and pete tracking big options activity in three stocks today there they are well get the trades next. It can power your apps with Public Services without starting from scratch. 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Its that time again unusual activity john and pete tracking the Options Market doc, we start with you what are you watching today first . Marvel tech, judge. This is giving you a little bit more time. They are buying the may 24s with the stock just over 23 a share. Paid about 1. 35 or so for them. Ill probably be in these calls up to two months, judge, becauseins a five month out and i like it and like the stock second one real quick. Thc, tenet, shorter term february, they are buying the february 17 calls and bought about 8,000 of them bang, bang, bang like that the stock was 15. 60 we bought that as well ill probably be in this about two weeks, judge. Okay. What about you, beat . You know, im sticking with the energy space had a lot of success recently after a lot of failure in the middle part of 2017. Had a lot of options that have been bought over the last couple of weeks over the end of 2017. Even two weeks ago, occidental, last friday exactly. They came scrambling in as john says and bought 7,000 of the calls and those have have doubled and what were seeing is they are coming back again 3,500 of the february 77. 5 calls were bought between 1 and 1. 25 and right after that trade hit another 5,000 were bought, so aggressive in the energy space im in these options and will be in there for at least next couple of weeks. Yeah. Its interesting energy, commodities have been ripping as gundlach told us he thought that they who since he was with us the middle of last month emailing here to remind you of that. Ive had the buy. Great call. It was a great call. The trade up to buy them. Just cant pull the trigger because of the huge move they pay. They will give you opportunity. Thats for sure. A strong start for the financial this earnings season wells fargo, Bank Analyst Mike Mayo is here there he is. Pass the mayo is next on halftime. Halftime. Alread but through good times and bad at t. Rowe price weve helped our investors stay confident for over 80 years. Call us or your advisor. T. Rowe price. Invest with confidence. 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. Your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. Welcome back to the Halftime Report. Banks are on the moving. Jpmorgan hitting a new high today after a beat on the top of the bottom line. Mike mayo is here. Senior bank analyst at wells fargo. What have you got, another prop . Do you ever come without props what is that just pick it up and show it. Look, what i think is still underappreciated about jpmorgan and the Bank Industry as a whole is a 25 your structural breakout act one was the last 25 years. Hold it up higher. This is act two for the banks. Action. And and what that means is its a structural breakout. Im going to start calling you marty now, as in scorcese. There you go. Okay. Look, you have a 25year structural breakout for the largest banks. 1994 is when you had first ever permission for banks to expand nationally 25 years later the execution, technology and approach have finally caught up to the business models. That allows a bank like jpmorgan this past year, 2017, had the best pretax margin in at least three decades. Thats as far back as our data goes also you have some of the best resiliency in throw decades and what youre seeing now is our theme is goliath is winning. Thats your note thats our report. Goliath is winning the largest banks are finally benefiting from scale and what you have in the 1990s the banks didnt integrate you raised your targets towards the end of last year across the board, right . Right. And that was before right before we got the tax plan, so what does that mean for the banks . Wow, the tax plan im in these debates, is it good, is it not . Its great for the Banking Industry the banks have paid 80 billion in taxes the last four quarters and with the lower tax rate. Thats a 30 billion benefit for reduced taxes. Now, look, you might wind up spending a third of that on additional investments and technology and you might spend a third of that on customers and employees, but at least a third of that falls to the bottom line if not more so, so thanks to benefit disproportionately, being a 31 taxpayer the last few years, banks benefit let me ask you this. The other question, and this goes to your conversation before about the stock market as a whole, its not just the tax rate its what we could call the tax dividend the secondary and tertre effects so you have more cash flow in corporations and thats only better for credit quality at banks and thats better for investing in bank stocks for the last century, if not longer. The other benefit of the tax dividend to the extend that corporations can afford more projects, more cap x, that has the potential for more lending, and you also have the potential for more animal spirits with the positive feedback. Okay. I dont know how long ago it was. Was it four months, maybe six at this point when you came on and talked about city, and you put this big huge price target on the stock, a fouryear price target or Something Like that. We still have a doubling. And what i want to ask you. Let me finish why why citi underperforming everybody else over the last few months i think theres a collective. And dramatically at that. Well, it outperformed the market last year. That was so last year. Come on. Im serious why has citi been a dramatic underperformer. Whats up with today in. Over the last three months and even the more another term period one thing as far as the tax benefit. Citi is to the 100 u. S. They are half u. S. So they dont benefit as much from tax second, they had some issues with their credit card portfolio that hurt by like a nickel or dime to eps potentially. Everybody jumped off, that you know, like theres no tomorrow and then thats the thing with the banks. Everybody is still negative. Can you go if youre at a computer right now, go type in financial crisis 2016, and then type in financial crisis 2010 or financial crisis 2006, you get more hits for financial crisis today than you did a few years ago. Everyone is all worried about that and thats the issue with citi group, a little hiccup with their credit card portfolio. Let me ask you whats on everyones mind. If jeff bezos decides, you know what, i know theres a lot of regulation but this is imperative to our business that we get into banking or if Facebook Says were going to get into the credit card business and well get into consumer lending, if any if google, facebook, amazon which have unlimited resources, lets agree to that decide, you know what. We dont need the marble columns and we dont need the corner banks in every town in america, were just going to do this. Dont you have to take whatever your estimates are for the next three years for these companies and literally rip them up and throw them out theres absolutely a longterm fin tech threat to banking and financials. In light of that, what should they be doing with this tax cut windful, paying 4. 5 dividends and buying back stocks or should they be investing in the future of payments, future of alleged, future of banking . What would you tell them to do my personal opinion its not a matter of if, itsa matter of when. Who are the largest players, bank of america, citi group. Already doing this. And when you have a small fin tech player. They get bought. By the large banks, spending 8 billion, 1 billion a yore. You think they are investing enough for this eventuality . Theres never enough money to invest and always additional project but look at bank of america. They have a level of deposit generation through mobile banking equal to 1,100 bank branches. By the way, this doesnt eradicate the threat because the name value of the brand of an amazon. 80 million prime users, they could be banking customers overnight. Per individual. They are you know, jpmorgan or whoever is not going to buy them. They cant so that doesnt remove the largest threat that youre talking about. Youve seen it happen in china, too, with alibaba. Right. Hand they moved. In other words, a lot is set up for the banks to have a great year we totally agree, but i just think that its one morning our going to wake up and one if not all of the companies i mentioned, including apple, by the way, could decide its in their best interest to eliminate whoever is the middle layer and go right to their consume we are a solution for handling their money and lending them money, whatever, and then i dont know how you do earnings estimates, you know, Going Forward in that environment and the entertainment business, learned that firsthand over the last couple of years. I dont think it happens with amazon because the regulatory scrutiny that it would bring to these companies would be just mindboggling. Sure. Plus the capital intensity is going to make it pete, let me get you into the conversation pete first of all, with the amazon discussion the one interesting aspect of that is take a look at everybody that was supposed to go out of business because of amazon and look at where they are now. You can use krogers and target and go across the board. People just had to compete, and thats whats forced by amazon is the competition level, so it doesnt mean that they are absolutely eliminating everybody out there, so i dont think they eliminate the banks. They just make the banks that much bert, and the fin tech, thats really where the money and the capital has been going and continues to but a question for mike real quick. Wells fargo, that name has had a huge turn from the lows just a couple months ago in november to where it is right now. Mike, when you read through that Earnings Report today, what do you think of wells fargo now its already made an incredible run in two months. Is there more upside there because sloan looks like he seems to have everybody actually backing him on the direction for wells fargo. Yeah, mike, what do you think . From an employee of wells fargo, what do you think . Well, i did not send my disclosures on wells fargo stocks, i cant comment on the stock. As far as employee, i will say ive never seen this level of communication to the employees the top of the house to, you know, every employee, town halls every other day, communication memos, whats happening and the degree of collaboration. Im very happy being at wells fargo. Come on, pete, what are you going to upgrade or downgrade the najarian well, no, but the interesting thing is heres the interesting [ overlapping speakers ] you guys could stop the interesting thing is when you look across some of the numbers from wells fargo, there are record numbers that were coming out of this report and thats what i thought was so interesting for me is i went through that report is you look at the competition out there and these record numbers in multiple different categories, look at the assets over 2 trillion. That was a really impressive quarter that wells fargo was able to put together but how can we read into some of the other financials just off of what we heard already today . We got from j. P. Morgan. We know fick trading is bad. We know loan growth is very strong is there something in the financials that really stands out, i guess, is what i was trying to ask. We got it were just trying to give you a hard time, pete. Yeah. Sure guys, have a good long weekend. Pete, jon, marty, mike, whatever have a good weekend too. We have big earnings week coming up well hit them next. No matter how the markets change. At t. Rowe price. Our disciplined approach remains. Global markets may be uncertain. But you can feel confident in our investment experience around the world. Call us or your advisor. T. Rowe price. Invest with confidence. 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. And at 4. 95, you can trade with a clear advantage. We could go down what do you think . Ney. Whooo yeah mmmmm. Want some . Its good, its refreshing. This is what our version of Financial Planning looks like. Tomorrow is important, but shes only seven once. Spend your life living. Find an advisor at northwesternmutual. Com. But through goodt times and bad at t. Rowe price weve helped our investors stay confident for over 80 years. Call us or your advisor. T. Rowe price. Invest with confidence. With expedia, you can book a flight, then add a hotel, and save. Everything you need to go. Expedia another big week for earnings there you go more banks on tap. Ibm is as well were looking forward to all those numbers next week. Lets do final trades. Josh brown. I mentioned twitter earlier in the show. Ive been an investor in it, so my comments were about trading it i know a lot of people are looking at it as a trade because its breaking out. Momentum is good i think it works shortterm and longterm. Okay. Erin brown. Yeah, i really like xli xli saw biggest inflows of the year to start the year of any etf domestically strong global growth, increasing inflation, great for industrials. Good stuff. Jimmy. Im 100 with mike on citi group. Okay. Weiss. Industrials of Engineering Construction jec. Another big day for the industrials. Good long weekend everybody. Power starts now im melissa lee here to talk a rally on the best start to the year since 2003. Major averages up 1. 5 this week alone. Where to put your money to work right now. Fixes facebook, Mark Zukckerberg making sweeping changes. Facebook stock down 4 right now is trying to do good socially undermining doing good for investors . And cars with no Steering Wheel and no pedals, really . Gm says get ready for well take you for a ride buckle up. Power lunch starts right now